U.S. Experiences Third Straight Month of Deflation
We aren’t technically in a period of deflation yet, as core inflation continues to remain positive. But last month, the Bureau of Labor Statistics said this morning, the United States experienced the third straight month of technical deflation, with the price of consumer goods falling 0.1 percent.
As in April and May, core inflation — which keeps out the prices of food and energy, which tend to jump around much more than the prices of other goods — increased 0.2 percent. A sharp 4.5 percent decline in the price of gasoline month-on-month dragged prices down overall.
The takeaway? The Federal Reserve need not be concerned about inflation — at all. The United States has experienced inflation of 1.0 percent over the past year, just barely increasing from its 44-year low of 0.9 percent annually, which it held in April and May. The price of consumer goods is stable, meaning there’s no need right now to worry about deflation. But inflation is far below the Federal Reserve’s own target, yet another sign of slack demand.