Slumping oil prices radically alter inflation outlook

The collapse in crude oil prices over the past month has radically altered the outlook for headline consumer price inflation over the next 12 months. The stronger dollar will only add to the disinflationary pressure, at a time when the risks of core inflation overshooting the Fed’s 2% target appear to be fading. The spike in natural gas prices looks dramatic, but that will have only a modest impact on final consumer prices.