Consumer prices fall by record 1.7%

[Amerigo Vespucci]

Source: CNN

NEW YORK (CNNMoney.com) -- Consumer prices - dragged down by plunging energy costs - fell by a staggering amount in November, the government reported Tuesday.

The Consumer Price Index, a key inflation reading, fell 1.7% last month, according to the Labor Department. That was much weaker than October's 1% drop and exceeded the 1.3% decline forecast by a consensus of economists surveyed by Briefing.com.

Prices fell by the greatest amount since the Department of Labor began publishing seasonally adjusted changes in February 1947.

"It's a further sign of the difficult environment we're in," said Terrin Griffiths, a former Labor Department employee and currently an economist at the California Credit Union League. "Households are reacting to the economy, and producers continue to lower prices to entice consumers to spend."

Read more: http://money.cnn.com/2008/12/16/news/economy/cpi/?postversion=2008121610

[sandnsea]

1. "dragged down by plunging energy costs" - ???

Prices brought down because the speculators got out of oil is not a sign of deflation. Exorbitant energy costs was dragging down the economy and contributed to the current problem as much as anything. Boy these people are stupid.

[Waiting For Everyman]

8. Exactly.

This is just a return to "normal". Sort of.

[aquart]

12. We were expecting other costs to drop after the gas did.

Now, if they want to have hysteria over the new prime rate...I'll say they have a real good case with that one.

[sinkingfeeling]

2. Well, while gasoline did go down, I haven't seen anything but price increases at the grocery store.

And was just informed today that Science Diet pet foods were going up again in Jan.

[stubtoe]

3. Skewed - don't they usually leave out "volatile food and energy costs"

when measuring INflation?

So why include these for deflation?

[RobinA]

4. You Are Right

But be careful, you demonstrate the ability to remember. The Man doesn't appreciate you remembering what he said yesterday.

[Alcibiades]

5. Because it's a badly written article

There's a distinction between the CPI and the "core CPI." Use of the core CPI (which excludes the "volatile" food and energy items, and so fails to accurately reflect the prices actually paid by consumers), rather than the CPI, is purest bullshit, which is, of course, why it is embraced by mainstream economists.

I think, though it's actually a little hard to tell from the article, that this article does reference the CPI rather than the "core" CPI, a measure specifically designed to mislead the public for propaganda purposes. If this is a trend, it would seem that they are switching measures on us for the purposes of reporting.

"The closely watched core CPI, which strips out volatile food and energy prices, was unchanged last month. Economists had expected a 0.1% rise after a 0.1% drop in October. Core CPI posted a 12-month change of 2%, down from a 2.2% rise on that basis from the month before.

Core inflation is now at its lowest point since September 2005 and at a level that central bankers are typically comfortable with. It's believed that the Federal Reserve wants the 12-month change in core inflation to remain between 1% and 2%.

Food prices actually continued to rise very slightly - increasing 0.2% in November - but energy prices fell by a record 17% in the month. Gasoline prices fell by 29.5% in the month, according to the report."

[stubtoe]

7. Thanks - I always suspected the "Core CPI" to be intentionally misleading.

[harun]

13. Nice summary and conclusions.

[BootinUp]

6. Its also a sign of how we have been getting

screwed over the last couple or more years by ridiculous inflation driven by invisible dollars.

[Javaman]

9. When I was a kid, young fella, it only cost me a dime to watch a movie...

oh wait.

[tclambert]

10. And now you can download bootlegs for free.

[Odin2005]

11. Shit. Deflation's gonna hit hard...

:scared: