Consumer Price Drop Is Biggest Since '55

Source: CNN Money

NEW YORK (CNNMoney.com) -- A key index of prices paid by consumers fell at the sharpest rate since August 1955 due to historically low energy prices, the government said Friday.

The Labor Department said the Consumer Price Index declined 0.7% on an annual basis in April, only the second year-over-year decline in nearly 54 years following March's 0.4% drop.

On a monthly basis, consumer prices were unchanged, in line with the consensus estimate of economists surveyed by Briefing.com.

The overall index was affected by a sharp decline in energy prices, which fell 2.4% in April, and are down 25.2% on an annual basis.

--CLIP--
Deflation, a widespread drop in prices, is a sign of economic weakness. Lowering prices is one way businesses can cope with falling demand. But if companies can't earn a profit selling their products at lower prices, they could be forced to cut production or lay off workers, which speeds up the pace of economic deterioration.

Read more: http://money.cnn.com/2009/05/15/news/economy/CPI_April/index.htm?section=money_mostpopular

looking at things around us.

20.1 cents per kwh, tax appraisal on our property is up 18% from last year, milk is $4.09/gallon.

What went down?

And thus all the industries behind home building, renovations, repairs.

The housing bubble burst and is dragging everything down with it.

Same for bread, butter, etc.

Flour and meat prices haven't seen a drop in fact chicken/pork has been at above average prices lately.

Mid-Michigan area btw...

anything, including the housing drops. Our new tax appraisal came in significantly higher than last years.

but how long have you owned a home in Texas? They can only raise property rates every 3 or 5 years, so they compensate by over-inflating the value of your home. You can fight it- but then you have to pay for an independent appraisal yourself, and that generally wipes out any money you might have saved.

We have several rental properties as well, all with double digit increases in valuation, especially one small apartment complex, which increased more than 60% since last year.

Our homesteaded property is valued at 4x what we paid in 1994.

We got a lawyer last year over about 10% increases, got that reduced to 85, and then this year, wham!

Milk prices are set by the state (PA) and have been slowly creeping up again, eggs can be found sometimes for .99 a dozen, but the usual price is 1.50+. Meat and produce forget about it.

Pump prices have increased, heating and other utility prices have increased and we have to take a wheelbarrow of cash to the grocery store in order to stock up on the essentials.

... there are apparently other reasons consumer prices can decline.

rent, food, utilities, car exp. I'm not seeing any "decreases".

I guess luxuries and frivolities are cheaper. That doesn't help when my income doesn't allow me to have those at ANY price.

Maybe my clients will have more disposable income to spend on their kitties, though. So it could eventually trickle down if I'm lucky.

Yoo Hoo......

:woohoo:

.........We all know there was some kind of deal made between Cheney and the energy companies. How many years in a row did oil companies have not just record profits, but windfall profits. I just saw today how health insurance prices went up 119% since 1999. Bush wasn't just good for business, Bush WAS business. A good part is the economy, but a large part is a Democrat is in the White House now.

Its one of the things I can't do without.

We saw the way the CPI numbers could be manipulated to show what ever an administration wants during Bush.

While its true some dairy prices are down, everything else has been increasing (or staying the same price with smaller packaging).

price rises in almost everything i regualrly buy

Agreed with that other poster right above you--this sounds just like another steaming helping of bullshit. EVERYTHING and I mean EVERYTHING that I buy is going in one direction only (UP). I don't know where these tumbling prices are being found because it's certainly not around here (central PA where it's definitely NOT any kind of luxurious locale)

invest in disco shirts

everything has gone up - food, water, sewer, garbage, gasoline ... and that is just a few.

Gasoline = $2.75 a gallon spotted the other day here. :mad:

DEFLATION my ass!

:kick:

no money for such frivolous things here.

You have to buy a lot of eggs to make up for that flat screen TV.

The CPI is an average for the country, not a spot-price check for a particular location.

It also has a specific "basket" of items, and excludes some that are volatile (such as gasoline).

Last year people insisted that the inflation rate was high because of a spike in commodities; some of those people also insisted on not counting reductions in price when the commodity bubble broke, while other took a narrow view and insisted it meant deflation (which mean depression). Since energy prices got worked into all sorts of food prices a month or two or three after energy prices soared, the energy spike did show up in the CPI--and now the decrease in energy prices *from last summer's highs* are showing up in the CPI.

It averages out over a few years, but people are often interested in very short-term changes because of their own biases. Here a lot of prices have declined, a lot have increased. Electricity is still down, gas is up a little (but way down since last summer), milk is about as expensive as it was 5 years ago, and let's not even mention Basmati rice (which has halved in price). Meanwhile, some other things are more expensive--bananas haven't returned to their early-2008 prices. I can focus on one set of prices or the other with equal disingenuousness, but I should try to come up with a reasonably weighed average.

Perhaps I underappreciate the value of outrage to keep my blood pressure dangerously high and thus fail to support drug companies as I should.

and CPI-W most definitely INCLUDE gasoline and food in their computation. Commonly reported is the "core CPI" which does exclude those items -- but they are in the index.

More importantly, those items are included when computing COLA adjustments for social security, government raises, etc.

See http://www.bls.gov/cpi/cpiri2008.pdf for a breakdown of the items and the weights in the CPI.