Consumer prices declined again in May
U.S. consumer prices declined in May for a third straight month as the coronavirus-induced recession continued to depress demand.
The consumer price index fell 0.1% from the prior month after a 0.8% drop in April that was the biggest since 2008, Labor Department figures showed Wednesday. The gauge increased 0.1% from a year earlier following a 0.3% gain in the year through April.
The core CPI, which excludes volatile food and fuel costs, also fell 0.1% from the prior month after a 0.4% decrease in April. Consumer inflation by that measure rose 1.2% from the prior year, the smallest advance since 2011, following 1.4% in April.
The third month of falling prices could spur concern about the risk of deflation as the U.S. economy begins recovering from the Covid-19 recession. At the same time, with states relaxing restrictions and stay-athome orders, prices stand to increase with the pickup in demand for goods and services.
The Federal Reserve -- which targets 2% inflation based on a separate Commerce Department measure -often looks to the core index for a better gauge of underlying price trends, and those costs have also declined three consecutive months.
Complicating the inflation figures is the fact that Americans have drastically curtailed purchases of some key elements of the index, such as air travel and clothing, while auto-insurance companies slashed premiums on account of fewer car trips. That’s made the CPI less representative of the prices consumers are experiencing on a day-to-day basis during the pandemic. Weightings of various items were largely little changed in the latest report.