Deflation Update: US reports record drop in consumer prices..

The US reported a record drop of 1% in consumer prices this week (after reporting a record drop in producer prices just yesterday).. read the Bloomberg story here..read another interesting Bloomberg story here.

Fortunately the drop was led by drop in energy prices which fell by 8.6%.. core prices fell as wel (excerpt from Bloomberg)l:

The drop in core prices reflected declines in the cost of clothing, automobiles, air fares and hotel rates. New-vehicle prices fell 0.5 percent and clothing costs dropped 1 percent. The price of airfares plunged 4.8 percent, the most since June 1999....The cost of all services, excluding fuel, was unchanged, the first time it hadn't increased since 1982.