A tale of two deflations, in one chart

The US has falling prices again, but bulls need not fear: it is “good” deflation, as it is all about falling gas (petrol) prices making consumers better off.

Still, this chart should offer pause for thought: it shows US inflation on the same basis as the eurozone, which is worrying about “bad” deflation. The eurozone doesn’t include housing costs in its basket of consumer prices, so this compares the US excluding housing costs too. It doesn’t look pretty, with more deflation on this basis in the US than Europe.