Tuesday, December 16, 2008

Consumer Price Index Slides 1.9%

The Consumer Price Index for All Urban Consumers (CPI-U) decreased 1.9 percent in November, before seasonal adjustment, the Bureau of Labor Statistics said. The November level of 212.425 (1982-84=100) was 1.1 percent higher than in November 2007.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) decreased 2.3 percent in November, prior to seasonal adjustment. The November level of 207.296 (1982-84=100) was 0.7 percent higher than in November 2007.It's time to take advantage of this fear generated demand for cash and stock up, at these prices, on whatever you can.

Clearly, the recession and the desire to hold cash balances is having its impact, but with the latest Fed numbers now showing double digit M2 money growth,the deflation party is not going to last. Indeed, it seems to be fueled mostly by the dip in oil. The food index and the apparel index were both higher. The energy index fell 17.0 percent in November. The decrease was about twice the October decline and energy prices are now 32.4 percent below the July peak earlier this year. The gasoline index fell 29.5 percent in November and gas prices are now 47.0 percent below their July peak.

Food prices increased 0.2 percent November following a 0.3 percent rise in October.The apparel index turned up in November, rising 0.3 percent after
declining 1.0 percent in October.

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