Nov. 16 (Bloomberg) -- The cost of living in the U.S. probably fell in October by the most in almost sixty years, while manufacturing and homebuilding sank deeper into a recession, economists said before reports this week.
Consumer prices probably dropped 0.8 percent last month, the most since 1949, according to the median estimate in a Bloomberg News survey. Builders broke ground on the fewest houses in at least a half century and factory output weakened further, other reports may show.......A report from the Labor Department on Nov. 18 may foreshadow the drop in retail costs. Wholesale prices fell 1.8 percent last month, the most since records began in 1947, according to economists surveyed....
Nov 16, 2008
Economists expect negative CPI in the US for October
We're certainly living in dynamic, unpredictable times.. just a couple of months back the world was worried about inflation (Mr Trichet especially).. and now delfation !!
Falling commodity prices may cause the consumer price index to fall for the first time in 60 years according to forecasts. Bond prices in the US imply a fall in consumer prices of about 2.5% over the next year (read my earlier blog post on the consequences of deflation). Unless monetary authorities can restart the free flow of credit in the banking system and come up with credible fiscal stimulus packages that support consumers and consumption, the deflationary spiral looks increasingly probable.
The silver lining for now is that the expected drop in consumer prices is due to the collapse of energy and commodity prices; prices ex food and energy are forecast to rise 0.2%.
Read the Bloomberg article..