Form the BLS:
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in March, before seasonal adjustment, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The index has decreased 0.4 percent over the last year, the first 12 month decline since August 1955.
On a seasonally adjusted basis, the CPI-U decreased 0.1 percent in March after rising 0.4 percent in February. The decrease was due to a downturn in the energy index, which declined 3.0 percent in March after rising 3.3 percent the previous month. All the energy indexes decreased, particularly the indexes for fuel oil, natural gas, and motor fuel. The food index declined 0.1 percent for the second straight month to virtually the same level as October 2008. The food at home index declined 0.4 percent, the second straight such decrease, as the index for dairy and related products continued to decline.
Here's the year over year chart from Econoday:
Prices have been hanging right around the 0% YOY for the last 4 months. This is a dangerous place because it could signal price deflation which would be terrible. The good news in the report is the energy prices and to a lesser degree food prices appear to be the main culprit of deflation:
All the energy indexes decreased, particularly the indexes for fuel oil, natural gas, and motor fuel. The food index declined 0.1 percent for the second straight month to virtually the same level as October 2008. The food at home index declined 0.4 percent, the second straight such decrease, as the index for dairy and related products continued to decline.
And there is this as well:
The index for all items less food and energy increased 0.2 percent for the third month in a row.
Looking at the chart above, note the gray lines the show the year over year percent change in the core rate. That series of data points stands just shy of two percent which is also encouraging from an anti-deflation standpoint. That does not mean we are out of the woods yet, however.
But then there is this information about producer prices:
The Producer Price Index for Finished Goods decreased 1.2 percent in March, seasonally adjusted. This decline followed a 0.1-percent advance in February and a 0.8-percent increase in January.
Accompanied by this chart:
Remember, producer prices feed into consumer prices. This means they happen first. So the drop above could start to hit CPI eventually.
PPI prices are broken down into three categories: crude goods, intermediate goods and finished goods. Here are the charts of the year over year percentage change in all three.
All three show incredibly large year over year drops. While at some time in the past we have been at these levels, its not very often. As a result, we need to keep an incredibly close eye on these data points.
