October CPI drops 1% - largest drop in 60 years

Marketwatch

U.S. consumer prices declined a record 1% in October, seasonally adjusted, as energy prices fell a record 8.6%, the Labor Department reported Wednesday. Data on the overall CPI date back to 1947, and the energy data go back to 1957. Meanwhile, food prices in October rose 0.3%, the smallest gain since May. The core consumer price index - which excludes food and energy prices - fell 0.1%, the first time there's been a decline in the core rate since 1982.

CPI, or consumer price index, measures the price of the things we buy. It's an indicator of whether we're in an inflationary or deflationary environment.

The large drop in fuel costs contributed heavily to the number. The measure excluding food and fuel, as noted, fell .1%, pointing to a deflationary trend.

reply to post by anachryon


I find it very telling/intriguing that when oil prices soar, they cite the CPI figure that excludes energy, food and food thus making it appear that inflation is lower and the economy stronger. However, when the price of oil plummets, they choose to cite the CPI figure that does include energy and food thus making it appear that inflation fears are limited and that the economy is stronger. I cannot help but see the similarities in this practice and the techniques used by Big Brother in "1984".

The CPI is largely discredited. All you have to do is look at the prices of what you buy to know that we are, and have been, experiencing massive inflation for a few years now.

What the CPI is picking up right now is due to the large degree of discounting going on at the wholesale level to clear out stocks built when sales were higher. I am seeing that in my business now. As production levels come down to match quantities demanded, the CPI, however flawed, will again begin to rise.

Regardless, considering the amount of funny money the U.S. is pumping into the world economy, you can expect nothing less than continud, out of control inflation (devaluation).

[edit on 19-11-2008 by Grumble]

Originally posted by Grumble
All you have to do is look at the prices of what you buy to know that we are, and have been, experiencing massive inflation for a few years now.

We have indeed.

However, with a combination of contraction of credit and destruction of debt,
meaning the "credit crisis" and the ever-increasing defaults,
we've entered a phase of deflation. It isn't fully reflected in key areas like food yet (have you seen the price of cheese lately???), but it's happening.

The bailout bucks and other funny money won't be enough to cause inflation .... yet. This deflation must happen to correct the rampant inflation we've experienced for the last several decades, and once that correction happens we'll be free to ride the inflation train again. And ride we will; there will most certainly be another "bubble" or "boom" once this is all over.