After January's figures came in, the Commerce Department reported yesterday that consumer prices had fallen on an annual basis over the previous 12 months. It was just by 0.1 percent, but still, that's the first time we've had deflation over a 12-month span since 2009.
There's one simple reason for this: energy prices. Gasoline prices fell by more than a third in the past year, and overall energy costs dropped by almost 20 percent. Aside from energy prices, consumer prices outside of energy were up 1.9 percent in January from a year earlier.
Indeed, it might seem that inflation is actually growing, because prices in many other areas are growing fairly strongly. Food prices are up by 3.2 percent from a year earlier; shelter costs rose by 2.9 percent, and costs for medical care were up by 2.3 percent for the 12 months.
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