FILE PHOTO: People shop at Macy’s Department store in New York City, U.S., March 11, 2019. REUTERS/Brendan McDermid
WASHINGTON (Reuters) – U.S. consumer prices dropped by the most since the Great Recession in April, weighed down by a plunge in demand for gasoline and services including airline travel as people stayed home during the coronavirus crisis.
The Labor Department said on Tuesday its 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.
In the 12 months through April, the CPI gained 0.3% after increasing 1.5% in March.
Economists polled by Reuters had forecast the CPI falling 0.8% in April and rising 0.4% year-on-year.
The Labor Department said in-store data collection has been suspended since March 16, because of risks of exposure to COVID-19, the respiratory illness caused by the coronavirus.
The department added that data collection last month was also impacted “by the temporary closing or limited operations of certain types of establishments,” leading to “an increase in the number of prices being considered temporarily unavailable and imputed.” That resulted in many indexes being based on smaller amounts of collected prices than usual, and a small number of indexes that are normally published were not published in April
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.
In the 12 months through April, the core CPI rose 1.4% after advancing 2.1% in March.
The Federal Reserve tracks the core personal consumption expenditures (PCE) price index for its 2% inflation target. The core PCE price index increased 1.7% year-on-year in March after rising 1.8% in February. April’s core PCE price index data will be released at the end of the month.
Reporting by Lucia Mutikani; Editing by Andrew Heavens and Andrea Ricci