Falling gasoline prices in April drove US inflation lower for a second straight month, the US government reported Thursday in Washington.
Consumer prices settled 0.4% lower in April after declining 0.2% in March. The turnaround has been abrupt given the sharp 0.7% jump in February which went down in the books as the biggest increase since June 2009.
"As was the case in March, a sharp decrease in the gasoline index was the primary cause of the decline," the Bureau of Labor Statistics said its monthly Consumer Price Index (CPI) report.
Prices at the pump tumbled 8.1% in April after falling 4.4% in March. Right before then, gas prices hit American consumers in the stomach when they soared 9.1%. With the reversal, prices have now fallen 8.3% from a year ago.
On the other hand, it is costing more to eat every day. Overall food prices, the government confirmed today, went up 0.2% last month after they had flattened in March. And they are 1.5% higher than last year this time. In breaking down some of the costs, the BLS reports:
"The index for food at home turned up in April, increasing 0.1 percent after declining 0.1 percent the prior month. Four of the six major grocery store food group indexes increased in April. The largest increase was for the cereals and bakery products index, which rose 0.6 percent. The indexes for meats, poultry, fish, and eggs, and for other food at home both increased 0.4 percent, while the nonalcoholic beverages index rose 0.3 percent
In contrast, the index for fruits and vegetables fell 1.4 percent in April as the indexes for fresh fruits and fresh vegetables both declined for the second straight month. The index for dairy and related products was unchanged in April after declining in February and March."
Stripping volatile food and energy prices gives the core US Inflation rate, as described by economists. That gauge climbed 0.1% in April to match the prior month’s level. Rising items tracked by the Bureau of Labor Statistics include:
- Used cars and trucks by 0.6%, a fourth monthly advance
- New vehicles by 0.3% after increasing 0.1% in March
- Medical care commodities by 0.1%, matching the prior month
- Shelter by 0.2% for a fourth straight month
- Tobacco by 0.6%, the first increase in three months
Medical care costs were unchanged in April, the first time they have not climbed since July 2010. A few items that fell in price include:
- Clothing by 0.3% for a third consecutive monthly drop
- Airfares by 0.7%, reversing from their increase of 0.6% in March
- Household furnishing by 0.1%, their fourth decline in the last five months
- Recreation by 0.1%
US inflation on a 12-month basis advanced 1.1%, easing from the prior increase of 1.5% in the 12 months ended March. The latest level marks the lowest inflation rate since November 2010.
Core US inflation gained 1.7% year-over-year through April. The core 12-month inflation rate was reported at 1.9% in March, 2.0% in the February and 1.9% in the three months before then. The core rate of inflation is closely watched by the Federal Reserve as it helps decide where the central bank sets its key interest rate. 1.7% is below the Fed’s 2% inflation target.
"We’ve seen very aggressive declines in gasoline prices, and that has some pass-through into other goods and services," Laura Rosner, a U.S. economist at BNP Paribas in New York, said before the report, according to Bloomberg.
"The Fed is watching the weakness in core inflation. It’s not their baseline assumption that the weakness will continue or worsen, but if it did, that would be a serious concern and would make them think about a response."
With recent decreases in consumer prices, the word "deflation" appeared in several media reports on Thursday. Deflation is a decrease in general prices, which is the exact opposite of inflation. Lower prices may seem like positive news for American consumers, but only to a certain extent. If prices mark sustained deflationary levels that come in below the cost to produce goods and services, turmoil can ensue with production cuts, payroll reductions and deeper unemployment.
The following table offers major US inflation data categories from October through April and over the past 12 months:
October 2012 – April 2013 Consumer Prices – Gains & Losses in Percent
|Oct 2012||Nov 2012||Dec 2012||Jan 2013||Feb 2013||Mar 2013||Apr 2013||12
|Food at home||0.3||0.3||0.2||.0||0.1||-0.1||0.1||1.0|
|Food away from home||0.1||0.1||0.1||0.1||0.1||0.2||0.3||2.3|
|Gasoline (all types)||-0.1||-6.0||-1.9||-3.0||9.1||-4.4||-8.1||-8.3|
|Utility (piped) gas service||-0.2||1.5||0.7||-1.7||1.2||1.0||4.4||7.6|
|All items less food, energy||0.2||0.1||0.1||0.3||0.2||0.1||0.1||1.7|
|Comm. less food, energy||.0||-0.1||-0.1||0.2||.0||-0.1||.0||-0.1|
|Used cars and trucks||-0.7||-0.4||-0.3||0.2||0.8||1.2||0.6||-0.6|
|Services less energy||0.2||0.2||0.2||0.3||0.2||0.2||0.1||2.3|
The US Bureau of Labor Statistics (BLS) notes a release date of June 18, 2013 at 8:30 AM ET for the next round of Consumer Price Index data. This batch of inflation information will provide the change in consumer prices through to the month of May 2013. Along with all the published information, the CPI is the data used in this site’s Inflation Calculator.