Deflation Watch

Consumer prices grew 0.1% overall in 2008, but in the last quarter they dropped 0.7%. In 2007, the inflation rate was 4.1%. Over the last quarter, core CPI (excluding food and energy) fell at an annual rate of 0.3%.

Janet Yellon, President of the San Francisco Fed called these levels "unhealthy" and chided policymakers for not doing more to prevent the onset of deflation.

More here.