Prices for Consumer Goods Fall for Second Straight Month
The prices for consumer goods fell for a second straight month, the Bureau of Labor Statistics reported today — meaning the second straight month of slight deflation. The Consumer Price Index tracked down 0.2 percent from April to May, with the index increasing 2.0 percent in the past year.
Deflation is not really a concern at the moment, though, since the decline is due entirely to falling energy prices. Gas in particular took a dive in May, with prices dropping 5.2 percent. Core inflation — a measurement leaving out energy and food prices, which tend to fluctuate more — increased a measly 0.1 percent month-to-month, growing 0.9 percent year-on-year. That is the lowest rate since 1966.
So what does the report mean? Mostly that concerns about imminent inflation are overwrought. Were the CPI to show strong growth, indicating increasing inflation, it would put pressure on the Federal Reserve to raise short-term interest rates.