Tuesday, April 14, 2009

Deflation Again?

The PPI fell in March, to a level lower than it has been since 2007. It is 8 percent below its peak last summer. It is 1.2 percent below February's PPI.

Retail sales (measured in dollars) fell 1.1 percent from February. However, the volume of retails sales might have been pretty constant if the CPI fell anything like the PPI did. http://www.bls.gov/ will let us know about the CPI tomorrow.

Some inflation-adjusted consumption decline Jan-Mar is to be expected, given how poorly the stock market did over that time. So if inflation-adjusted March retail sales are ultimately flat, I view that as good news, although I would like to see prices stop declining.

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