Consumer Price Index Fell at Record Pace in November – Chart of the Day

Stock prices are falling, house prices are falling, gas prices are falling. And when gas prices lost more than 60% in 5 months, we know we are going to get  a break on inflation. After all, the economy is in a recession and demands on everything are down.

The Bureau of Labor Statistics released this morning the Consumer Price Index for November 2008 and, as expected, prices fell sharply last month as consumers cut back on spending  amid the worst economic slowdown in decades. According to the report, the Consumer Price Index for All Urban Consumers (CPI-U) decreased 1.7% in November after seasonal adjustment, the steepest monthly decline percentage wise since 1947 when the Labor Department started to track CPI.

Falling energy, gas partiular, prices played a big role in the overall decline of the index. The report says the energy index fell 17% in November, twice as much as that in October. The gasoline index dropped  29.5% last month. Since the peak of July, the index has lost 47%.

As the inflation presure eased, the Fed has the room to further adjust interest rate. In a few minutes, they will announce their rate decision after two days of meeting. Are we heading to zero interest rate? We will know soon.