US Inflation down as Consumer prices fall 1% in 1 month

As the US recession bites hard, consumer prices dropped at the fastest rate on record in October and new home construction was at a record low.

While the price drop is welcome for consumers in the immediate term, a period of deflation is never good for any economy and has a corrosive effect on performance.

The Federal Labor Department said its widely watched Consumer Price Index (CPI) plummeted 1 percent in October, exceeding forecasts by Wall Street analysts for a 0.8 percent decline and the biggest drop since the department began monthly data in 1947.

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3 Responses to US Inflation down as Consumer prices fall 1% in 1 month

  1. Jesse says:

    Just so you know, deflation is good for the economy right now. Why shouldn’t house prices come down? They were bloated and too high!

  2. miscstuff says:

    Deflation isn’t just about house prices. This is a measure of all prices paid by consumers. House prices are not included in the measure. Deflation = contraction = less employment= more deflation. Surely you can’t advocate that?
    For the record I agree with you on house prices but consumer prices are a whole other story

  3. Jesse says:

    deflation is a natural aspect of the market process. people across america are seeing the negative effects of bad policies, tightening their belts and ultimately doing exactly what they should be doing. trying to save.

    there is nothing to fear here. what we should fear are those that are trying to re-inflate and fight the market forces. this will only cause confusion by disrupting prices and hence mis-allocation of wealth will result. (i.e., the reason why the market is messed up now)

    the market needs to cleanse itself of bad investments. deflation is one aspect of that process.

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