Last month, prices dropped 1%, the most in 61 years, according to the Consumer Price Index report. This really just makes official the deflation we have already experienced - a 47% (and dropping) decrease in the stock market, and a 27% decline in housing prices. These are not measured in the CPI. Recessions also cause deflation in personal income, as layoffs become more common and raises become less common.

What It Means to You

The good news is that your cost of living will decline. The bad news is that your wealth has already declined, and could go down further. The ugly news is that the job market is becoming more difficult, so make sure you take advantage of deflation by cutting your costs even further.

Best Moves Now

• Cut Your Entertainment Budget
• Grocery Stores That Double Coupons
• Grocery Savings - Local Supermarket Flyers