US prices are falling. The 0.7% decline in US consumer prices was the largest monthly drop since December 2008. Consumer prices in January fell 0.1% from a year ago. The last time the year-over-year CPI was negative was when the US economy was just beginning to recover from deep contraction associated with the end of the credit cycle and the financial crisis. Does this mean that US is experiencing deflation? If so why is the Fed preparing the market for an eventual rate hike? Recall what inflation and deflation means to policy makers. It refers to a change in the general level of prices. What the headline CPI is ... (full story)