The markets are supposed to like periods of low inflation. Deflation is another animal entirely. The take of 24/7 Wall St. is that deflationary economic readings are going to be present for at least another six months, which will then negate that largest portion of the drop in oil prices. Now a report on retail sales from September is very muted, and the report on the Producer Price Index (PPI) is outright deflationary.

The U.S. Census Bureau announced on Wednesday that its advance estimates of U.S. retail sales for September was up a mere 0.1% sequentially to $447.7 billion on a seasonally adjusted basis. That reading was shown to be up by 2.4% from a year ago.

Retail trade sales in September were virtually unchanged from August 2015, but they were up by 1.7% from a year ago. Motor vehicle and parts dealers were up 8.8% from last year, and food services and drinking places retail sales were up 7.9% from a year earlier.

And for the deflationary report: The U.S. Department of Labor released its PPI for final demand for the month of September. The headline PPI was -0.5% on a sequential basis, and it was down by 1.1% on an annualized basis. The core-PPI, excluding food and energy, was down by 0.3% in September from the prior month, but it was up by 0.8% from a year earlier.

Those inflationary readings are just going to look bad for a while longer when you consider the trickle-down (and the trickle-up) impact of oil and energy prices affecting so many products due to the cost of production and the cost of transporting those goods around the nation.

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