Deflation?

The latest consumer prices declined 1.9% last month, up 1.1% y/y and down 10.2% in the last 3 months at annual rate.

Producer prices declined 2.2% last month, up a mere 0.4% y/y.

Bottom line. Prices will continue to decline as long as the economy is weak. See, for instance, the previous 2000-2002 episode. There is no question we are in a period of deflation (click on chart to enlarge), and in a period of deflation only one asset class is king -- cash.

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George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977