Despite low interest rates, prices drop

Prices appear to be following a more deflationary trend than inflationary.

This week the Bureau of Labor Statistics (BLS) released their latest read on producer (PPI) and consumer (CPI) prices indicating that, despite the Feds near zero interest rates and unprecedented levels of government stimulus, prices appear to be following a more deflationary trend than inflationary.

Of course, there are numerous disputes over the formulation and interpretation of these measures particularly for CPI (owner’s equivalent rent, quality substitutions, etc.) but be that as it may, both measures are continuing to trend lower with on a year-over-year basis.

The PPI for finished goods less food and energy edged up just slightly rising 0.23% since March and remaining just 1.05% above the level seen in April 2009 while CPI less food and energy increased only 0.05% since March climbing just 0.84% above the level seen April 2009.