I haven't posted in a while, because, frankly, who wants to keep hearing that the sky is falling?! But... CPI-U, the Fed's official urban price-inflation indicator, just printed out at minus 10 basis points (-0.10%).
The Fed's inflation metrics are geared to understate inflation (there has been a move to replace the current system with a simple median price change, but it hasn't gotten much traction) -- I don't know if this could lead to overstating deflation or not. Given the fact that the changes are multipliers rather than subtractions, my assumption is their measurements will understate deflation too, but I can't say that with any certainty at all.
2 comments:
Is it possible that deflation can be a price correction (i.e. - as commodity prices drop, the cost to produce the goods drops, and therefore basic good costs drop as well), or is it always connected to currency values?
With the dollar being strangely stable against other currencies and with the US importing so much, maybe the deflation value is a reflection of the imports are getting cheaper again?
Keep posting it. Some of us read AE Housman at an impressionable age. :)
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