Thursday, November 20, 2008
There was quite a bit of talk about yesterday's decline of 0.1 percent in "core" inflation (consumer prices less food and energy), the first monthly decline in this series since 1982. Looking into the numbers, it doesn't seem like it's a very big deal, though the chart below is not likely to stop anyone from screaming DEFLATION if that's what they really want to do. The two main contributions to the overall decline come from two categories that have been declining in price for years - apparel and automobiles. There's nothing new there.
The third category with a big decline was public transportation which, as I read the BLS data, escapes the "energy" label, but probably shouldn't as a large portion of the costs of operating a public transportation system derive from the price of fuel.
All the categories that have been rising continued to rise in October, notably health care and education, and of course food prices continued their ascent, rising 0.3 percent last month, now up 6.1 percent on a year-over-year basis.
Maybe next month there will be a legitimate reason to scream DEFLATION...