Consumer prices in the U.S plummeted in April by the most since the Great Recession. The biggest item dragging down the index was gasoline as Americans stayed home during the coronavirus crisis
The report from the Labor Department on Tuesday also showed a record decrease in underlying prices last month, raising the specter of a bout of deflation as the economy sinks deeper into a recession triggered by lockdowns to slow the spread of COVID-19, the respiratory illness caused by the coronavirus.
The consumer price index tumbled 0.8% last month after falling 0.4% in March. That was the largest decline since December 2008 when the economy was in the throes of a recession, and marked the second straight monthly decrease in the CPI. Economists polled by Reuters had forecast the CPI falling 0.8% in April and rising 0.4% year-on-year.
Excluding the volatile food and energy components, the CPI dropped 0.4% in April, the largest decline since the series started in 1957. The so-called core CPI dipped 0.1% in March, which was the first drop since January 2010. April marked the first back-to-back fall in the core CPI since 1982. “This is not to suggest that we see runaway inflation coming down the road, we do not, but the market’s pricing of inflation at effectively zero is unrealistic and excessively pessimistic,” said Rick Rieder, chief investment officer of global fixed income at BlackRock in New York.
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