CPI Drops Record 1%
This is somewhat good news for the economy.
The Consumer Price Index for All Urban Consumers (CPI-U) decreased 1.0 percent in October, before seasonal adjustment, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The October level of 216.573 (1982-84=100) was 3.7 percent higher than in October 2007.
A drop like this in the CPI suggests that at the very least the Fed can put aside worries of inflation for the moment which means it is unlikely that interest rates will go up. This is the largest one month decrease since 1947 when the BLS started publishing the monthly seasonally adjusted CPI numbers.
The reason for the decline are the large decreases in the energy portion of the index lead by the 14.2 percent drop in the gasoline index. Still gasoline prices are over 12 percent higher than where they were last year.