Prices for goods actually declined -0.1% in January from a year ago, according to the Labor Department. That means it actually cost less to buy things in America this year than it did in January 2014.
It's the first time since October 2009 that the U.S. economy experienced deflation.
As most consumers know, the main driver of falling prices is cheap gas. A year ago, gas was around $3.40 a gallon, on average. For much of January, the national average for a gallon of was around $2.15.
Related: The story behind oil's plunge
Inflation is the only major yardstick of the economy going in the wrong direction. A strong and growing U.S. economy typically has inflation of around 2% a year, so a negative number is far from the mark.
January's deflation could cause the Federal Reserve to hesitate on raising its key interest rate, which many expect them to do later this year. Federal Reserve Chair Janet Yellen and her fellow board members do not want to raise interest rates until the economy shows real momentum.
Overall, the U.S. economy has many signs of improvement. The unemployment rate is dropping, growth is picking up and hiring has been strong. But many Americans haven't seen any real improvement in their paychecks in years.
When Yellen testified before Congress this week, she was pummeled with questions about the lack wage growth and why Main Street isn't feeling the recovery.
Since wages are staying flat, consumers have been thankful for low gas prices, but don't expect it to last for long. Most economists believe the cheap gas and deflation will be short-lived.
Related: Janet Yellen: Too many Americans aren't making it
CNNMoney (New York) February 26, 2015: 9:18 AM ET
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