The Atlanta Fed Flexible CPI is a price series developed by the Atlanta Fed to capture the price of items that change the most frequently. This price series is supposed to be more responsive to real-time changes in the economy than the CPI, so generally, it is looked at as a leading indicator of the CPI.
Flexible prices are generally associated with frequently purchased goods, like gasoline, groceries or dry cleaning. Their change doesn’t necessarily contain information about long-term inflation expectations, but they do provide a near real-time estimate of price pressures in the economy.
Well, the Atlanta Fed Flexible CPI has been dropping like a stone, deflating by -5.53% over the last 3 months (AR).
This drop is a good leading indicator for where overall CPI year-over-year may travel in the months to come. If its information value continues, it could suggest a fairly rapid plunge in the CPI this year.
It currently suggests a year-over-year rate of about 2% on the CPI. This is way below consensus economic predictions for the year, and if it came to pass, it would turn out to be a terribly positive surprise for the US economy and those that worry about long-term, engrained inflation.