The Labor Dept. reported yesterday that the index of consumer prices was down 0.3% in November and was up 1.3% year over year vs. 1.7% in October. Much of the decline was due to falling gasoline prices which make up about 5% of the index and were down 11% year over year. This was the biggest one month drop since December 2008.
Excluding food and energy core CPI rose 0.1% in November and 1.7% year over year.
With gasoline prices expected to fall further this index is most likely on a downward path in the near future. One metric to watch is wage growth. A separate report Wednesday showed Americans’ wages are picking up as the labor market strengthens. Americans’ real average weekly earnings rose 0.9% in November from the prior month. That reflected a 0.6% rise in inflation-adjusted hourly earnings and a 0.3% increase in the average workweek.