PPI Numbers Signal Deflation.

PPI prices declined 2.8% today and signals a current and deep deflationary spiral. According to Tony Crescenzi, chief bond market strategist at Miller Tabak + Co., LLC, this drop beats the previous record drop of 1.6% set in October 2001 and is the largest since record-keeping began in 1947.

The deflation picture is most glaring in the prices of goods in earlier stages of the production process. Intermediate goods prices, which reflect the prices of goods at the middle stage of the production process also fell 3.9% overall, a record drop that beat the previous record of -2.3% set in April 2003.

The massive declines in prices at earlier stages of production underscore the deflationary tendency that exists in the economy at the moment and which will exist for many months to come.

Source: Huge Deflation Seen in the PPI Details, Tony Crescenzi, RealMoney.com contributor, 11/18/2008 9:21 AM EST