More talk of deflation is on the horizon. Most of this is tied to low energy prices, but China devaluing its currency will add deflationary pressure as well. The Bureau of Labor Statistics (BLS) reported on Wednesday that its Consumer Price Index (CPI) declined by 0.1% in December of 2015.

The report is on a seasonally adjusted basis, but Bloomberg was calling for the reading to be flat instead of negative. Over the past 12 months, the all items index increased by 0.7% before the seasonal adjustment.

Core CPI, excluding food and energy, was up 0.1% in December. Bloomberg’s Econoday estimate was for a gain of 0.2%. That gain for the core CPI reading on an annual basis was up at 2.1% — and the Federal Reserve wants 2% inflation.

The indexes for energy and food both declined for the second month in a row. It was the energy index leading the drop, with a 2.4% drop, versus a food index drop of 0.2%. The index for food at home was down 0.5%, led by a sharp decline in prices of meats, poultry, fish, and eggs.

Wednesday’s BLS report showed that the index for all items less food and energy rose 0.1% in December. This was the smallest price gain since last August.

Inflation is where you have rent and your legally obliged insurance. Things like the shirt on your back, cellphones, and plane tickets were down in December. The BLS said:

The index for shelter continued to rise, and the indexes for medical care, household furnishings and operations, motor vehicle insurance, education, used cars and trucks, and tobacco also increased in December. However, a number of indexes declined, including those for apparel, airline fares, personal care, new vehicles, and communication.

The all items index gain of 0.7% over the past 12 months compares to a 0.5% gain (12 month) for the period ending November. The food index was up by 0.8% over the past 12 months, though the index for food at home declined. Again energy led the drop here. The energy index fell by a whopping 12.6%, and with all of its major components decreasing. The index for all items less food and energy increased 2.1% over the past 12 months.

Perhaps the best quote ever seen about deflation was something along these lines: “I don’t really know what real deflation looks like, but you won’t like it when you see it.”

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