Consumer Price Data Show Slight Deflation in April
Fed governors and market gurus have been warning about the threat of inflation to the United States economy — but there remains no sign of prices rising at worrying rates. Indeed, this morning, the Bureau of Labor Statistics reported a slight deflation in the price of consumer goods in April — a decline of 0.1 percent. Over the past year, the Consumer Price Index has increased 2.2 percent.
The single-month downturn does not signal that the United States is in for a troubling period of deflation. It is due to a drop in energy commodity prices, particularly a 2.4 percent decline in the cost of gasoline. Most other prices, for things like food and cars, drifted slightly upward. Core CPI — a better measure of underlying inflation — did not budge in April. Year-over-year, it is 0.9 percent, the lowest rate since 1966.
Were the CPI to show stronger growth, indicating increasing inflation, it would put pressure on the Federal Reserve to raise short-term interest rates.