There is a silver lining to the de-leveraging process we have witnessed over the past few months. Asset deflation has also come in the form of lower prices for consumer products and services.  This is evident especially for the month of October, as the Consumer Price Index was down a record 1.0% for the month, the steepest rate of decline since 1947. The report was better than expected, as economists were expecting a 0.7% decline in the CPI. Core CPI, which excludes energy and food prices because of their volatile nature, also fell, albeit slightly. Core CPI decreased 0.1%, below the 0.1% gain predicted by economists. It was the first decline in the core rate since 1982. In the last year, consumer prices have increased 3.7%. Core CPI gained 2.2% in the same period.

The reading was largely attributed to a decrease in consumer energy prices. Energy prices in the US fell a record 8.6% for the month, also the steepest decline since 1947. The index for gasoline decreased a record 14.2%, following a 0.6% decrease in September. 

The index for owners’ equivalent rent rose 0.1% in October.

Fuel oil prices dropped 11.8%. Natural gas prices fell 4.4%, as electricity gained 1.7%.

The transportation index fell a record 5.4%. This data has been kept since 1947. Prices for airlines fares fell 4.8%, and dipped 0.5% for new vehicles.

Medical care rose 0.2%, while recreation gained 0.1%.

[Food prices rose 0.3%, the smallest gain since May.] The price index for meats, poultry, fish and eggs rose 0.6%, while the index for fruits and vegetables fell 2.2%.

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