Nov 19, 2008 9:14 pm US/Eastern
Consumers Begin To See Change In Grocery Bills
BOSTON (WBZ) ―
The Consumer Price Index (CPI), our nation's best-known gauge of inflation, dropped a full percentage point in October, which is its biggest drop in its 61-year history.
Consumers are feeling it in some places, but not everywhere.
As corny as it sounds, the gas pump has become a source of economic sunshine. In the context of the past year, $1.99 is a "wow" number. Here's another one: Gas prices fell 14.2 percent in the last monthly Consumer Price Index.
The latest CPI points to glimmers of good news in the grocery aisle as well.
From September to October, the price of fruits and vegetables dropped 2.2 percent. Dairy products dropped 1 percent.
Cereals, bakery items, meats and poultry rose 0.6 percent, but that increase actually represents a slowdown in rising prices.
But that feeling of extra money in the wallet resonates strongest right now at the pumps.
And where is all that money going? Shopping, snowboarding, traveling," said one woman filling up her car. "I'm trying to be patriotic – put more money back into the economy."
Another woman said she was using the money she saves on gas to do this year's Christmas shopping.
"I think you try to hold onto it," said a man who was filling up. "See where the economy is going."
It turns out there is good reason to feel like you need to hold onto your money. While the lower gas prices might feel like good news, a sustained drop in consumer prices could le to deflation, which would slow the efforts to revive the economy.
On Wednesday, the Federal Reserve's vice chair said the risk of deflation is slight, but increasing.
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