CPI: Energy fools the magician

Today’s release of the March CPI figures brings the news that we had our first 12-month deflation, of 0.4%, since 1955.  Yikes, right?

Not really.  The deflation came mostly from lower energy prices.  The “core” inflation rate, which excludes food and energy prices, was 1.8%.

Likewise, the modest price dip of the past month (0.1% each month) was also driven by falling energy costs.   Non-energy prices rose slightly.

What is the source of these falling energy prices?  Some of it seems to be a function of the sagging economy (poorer people drive less), but I expect there’s favorable supply shock in there somewhere.  And I have to think it nets out to a favorable supply shock for consumers as a whole.


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2 Responses to “CPI: Energy fools the magician”

  1. democommie Says:


    I contributed by doing my wasteful 900 mile, one person in the car, trip to the New England colonies by renting a Cobalt that gets about twice the mileage that my Ranger currently boasts. I also contributed to the economic engine’s revving by requiring friends to take me out to dinner and buy me cocktails. It went so well I’m thinking about using it as a business model. Can you help me with the computer stuff (people love graphs and stuff–it makes being fleeced seem, I don’t know–smarter?). Looking forward to seeing you and listening to OJP.

  2. Ranjit Says:


    I like it – I think that was the economic rationale for the Twenty-First Amendment!

    I’ll be out of town Wednesday night, so no OJP for me, but you can see me tonight with a legal smile at Greene’s, ~5:30-6:30.

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