The Daily Caller

The Daily Caller
              Traders gather at the post of specialist Ronnie Howard, center, on the floor of the New York Stock Exchange Monday, April 29, 2013. Enthusiasm on Wall Street sparked by another positive report on the U.S. economy helped push most Asian stock markets higher Wednesday May 15, 2013. But lower-than-expected German economic growth disappointed investors elsewhere. (AP Photo/Richard Drew)

Economists continue to get the biggest economic story of the year wrong

Minutes ago, we got the April reading of consumer prices.

Not only did the numbers reflect a complete absence of inflation, they also showed that economists continue to overestimate inflation.

Headline CPI fell by 0.4 percent, which was more than the 0.3 percent decline expected.  This was largely due to the drop in energy prices.

Core CPI, which excludes food and energy prices, climbed by just 0.1 percent, which was also more modest than the 0.2 percent expected.

“The big story this year is not the U.S. spending sequester, the China slowdown or the ongoing European recession,” said Ethan Harris, Bank of America Merrill Lynch‘s top global economist. “The big story is inflation, or more precisely, the lack thereof.

“The weakness has come as a surprise to economic forecasters and an even bigger surprise to many market participants. Critics of the major central banks have repeatedly warned that easy policy would lead to runaway inflation. However, in reality inflation is falling, not rising.”

Here’s a chart of of BAML’s global inflation surprise index. As you can see, inflation has been surprising economists to the downside all around the world.

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