Also, services -- including housing costs -- account for 60% of the CPI. Prices for many services historically have been notoriously "sticky." And the way the government calculates housing costs, including rents, has long frustrated economists who say it doesn't truly measure what is happening in the housing market.
That has been a glaring deficiency in the CPI amid the housing crash, Bethune said.
Despite the props under the CPI, Lacy Hunt, economist at Hoisington Investment Management in Austin, Texas, asserts that deflation hasn't been defeated -- just delayed.
"The greatest deflation threat is ahead of us, not behind us," Hunt said.
Inflation is a lagging indicator; since 1950, inflation has reached its lowest points on average 29 months after recessions, Hunt said. And this time around, "We've got huge amounts of excess capacity in labor markets and everywhere else," he said. Coupled with consumers' need to save money to rebuild their finances, that's a recipe for deflation despite the tidal wave of money that central banks are making available, he said.
For investors, the lack of clarity on the inflation issue suggests that a middle ground is still the best place to be, wimpy as that will sound: Keep some bet (probably stocks) that governments can beat deflation, but have a hedge (like Treasury bonds or cash) in case they're too late.