1932. That’s the last time we saw consumer prices fall this far, this fast. 76 years ago, in the midst of the Great Depression. I guess there is a silver lining to this mess after all.
Deflation has come in the form of lower prices for all consumer products and services. This is evident for the month of November, as the Consumer Price Index was down a record 1.7% for the month, the steepest rate of decline since 1947. If you subtract any seasonal adjustments, it is down 1.9%, the largest decline since 1932.
The report was better than expected, as economists were expecting a 1.4% decline in the CPI. Core CPI, which excludes energy and food prices because of their volatile nature, came in flat, better than the 0.1% increase expected by the same economists. In the last year, consumer prices have increased 1.1%. Core CPI has risen 2.0% in the same period.
The reading was largely attributed to a decrease in consumer energy prices. Energy prices in the US fell a record 17% for the month, also the steepest decline since 1947. The index for gasoline decreased a record 29.5%, following a 14.2% decrease in October.
Food prices rose by 0.2% in November, while energy prices plunged 17%. Gasoline prices fell 29.5%.
The cost of owning a house, meanwhile, rose 0.3% in November.
Falling transportation prices contributed to the overall decline. Those prices dropped 9.8% in November and are down 8.9% over the past year.
Meanwhile, medical care prices continued to rise. They climbed by 0.2% in November and are up 2.7% in the past year
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