Paul Kasriel of Northern Trust documents the myth of falling prices with some very interesting charts. He notes that the year-over-year percent change in the core intermediate and crude PPI is actually on an uptrend relative to 2001. He further shows that the only existing deflation is observed in the portion of the CPI called “owners’ equivalent rent” (OER), which accounts for 28% of the overall core CPI. Rents have fallen as house prices have increased. While it’s true that the core CPI in March increased by only 1.7%, the smallest increase since 1966, he points out with some irony that “the Great Inflation of the post-WWII era commenced soon after 1966.”
Finally, for those still worried about deflation, Kasriel offers this look at long-term price trends:
