Reasons:
1. real estate bubble burst
2. plunge in energy prices
3. Food costs dropped. Dairy products led the decline

Consumer prices dipped unexpectedly in March, leaving prices over the past year falling at the fastest clip in more than a half-century.

The drop was largely driven by declining food and energy prices. Gasoline prices plummeted 13.1 percent, while home heating oil fell 13.2 percent, the sharpest drops for both since December. Food prices fell 0.7 percent.

Excluding volatile food and energy prices, the PPI was unchanged, below analysts' forecasts of a 0.1 percent rise.

The Labor Department said Wednesday that consumer prices edged down 0.1 percent in March from February as a drop in energy prices offset the biggest rise in tobacco prices in more than a decade. On average, economists had expected a 0.1 percent rise in the consumer price index.

Over the past 12 months, consumer prices have fallen 0.4 percent, the first 12-month decline since a similar drop for the year that ended in August 1955.

Core inflation, which excludes energy and food, rose 0.2 percent last month, matching the gains of the past three months. It was slightly higher than the 0.1 percent rise economists expected.
Source(s):
http://www.chicagotribune.com/business/chi-tc-biz-swap-economy-0416apr16,0,...
http://www.foxnews.com/politics/2009/04/14/wholesale-prices-drop-sharply-ma...

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