Annual inflation at -0.7%, sharpest drop in consumer prices since 1955

Despite a flat reading for U.S. consumer prices in April, the annual inflation rate fell with the sharpest decline in 54 years, the government reported on Friday.

The Labor Department said the Consumer Price Index (CPI) remained unchanged in April after decreasing 0.1% in March. However, a reduction in the cost of energy over the past 12 months helped drive the annual rate 0.7% lower, marking the second straight monthly dip and the biggest decline since August 1955.

"The era of U.S. consumer price deflation is now upon us as the ongoing economic recession and deteriorating labor market conditions continue to weaken the bargaining power of retailers and laborers alike, thereby quenching the once raging inflationary flames," Millan Mulraine, economics strategist for TD Securities, was quoted on Forbes.com

There is a debate raging between economists on whether a threat to the approaching economy is rising inflation or spiraling, out of control falling prices, known as deflation. Continue reading Annual inflation at -0.7%, sharpest drop in consumer prices since 1955

Inflation calculator, rates update – 5/15

U.S. consumer prices from a year ago have fallen by the biggest amount in more than 50 years, the Bureau of Labor Statistics (BLS) said in a report provided on Friday, May 15. To be more exact, prices had not dropped as fast since August 1955.

The Consumer Price Index (CPI) data has the annual inflation rate at -0.7% compared to the March rate of -0.4%. It was cheaper energy that helped pull down prices. Compared to a year ago, energy prices dropped 25.2%. (While gas prices at the pump have been rising recently, those figures will not be calculated into available data until next month’s report is released.)

On a monthly basis, consumer prices remained unchanged following the 0.1% declined in March and the 0.4% increase in February.

The Inflation Calculator is updated with the newest government information, as are the following pages:

CPI Data from 1913 to 2009

Inflation Rates: 1999-2009

Historical Inflation Rates: 1914-2009

Annual Averages for Rate of Inflation

For an in depth look at April consumer prices, read the article Annual inflation at -0.7%…

Producer prices rise 0.3% on higher food prices

Producer prices in the U.S. reversed course from March and climbed to a higher than expected 0.3% in April, according to the Labor Department’s Producer Price Index (PPI) report on Thursday. The PPI measures prices at the factory door and inflation pressures before they reach the consumer.

In March, cheaper energy pushed down prices by 1.2%, leading to renewed fears of accelerating deflation. In April, the government data shows that a 1.5% increase in the cost of food offset a 0.1% fall in energy prices — energy costs were down 5.5% in March. And with that, some of the deflationary steam has been evaporated. Deflation is a persistent decrease in general prices, or the opposite of inflation.

"It’s impossible to see how deflation can persist given the amount of liquidity in the system," Maxwell Clarke, chief U.S. economist at 4Cast.com in New York, was quoted on Bloomberg. "With oil moving back up, the thought in people’s minds becomes that inflation could ultimately become a problem that outweighs deflation."

It is worth noting that the PPI index has fallen 3.7% when compared to the same period last year, marking the biggest year-over-year fall since January 1950. Continue reading Producer prices rise 0.3% on higher food prices