Core Inflation Falls to Lowest Level Ever While Food Prices Soar Most Since 1974

Deflation picked up in the U.S. in April, pushing consumer prices down 0.8 percent compared with a month earlier, even while food prices soared. The price of gasoline dropped 20.6 percent for the month, the Department of Labor said Tuesday. The prices for clothing, airline travel, cars, recreation, and hotels all plunged while the price of groceries saw its biggest monthly increase since 1974. Compared with a year ago, prices were up 0.3 percent, Core inflation, a measure which subtracts changes in the prices of the volatile food and energy categories, fell 0.4 percent, the steepest decline ever in records of the Consumer Price Index going back to 1957. The Federal Reserve says it aims for 2 percent annual inflation, based on a different measure of prices called personal consumption price index. It tends to run a half a percentage point or so below the more familiar Consumer Price Index. In March, the Fed cut its target to a range of 0 to 0.25 percent and has announced a number of new programs aimed at bolstering the economy and supporting prices. As well, Congress has authorized trillions of new spending programs aimed at supporting employment and businesses hit by the virus and lockdowns. Prices for medical care, rent, and household furnishings all increased in April. The Department of Labor’s gauge of food prices increased 1.5 percent in April following a 0.3-percent increase in March. The food at home index increased 2.6 percent. The increase was broad-based, with all six major grocery store food groups increasing at least 1.5 percent over the month, the government said. Food prices reflect the periodic shortages many Americans have experienced at the grocery store. The index for meats, poultry, fish, and eggs increased the most, rising 4.3 percent. The index for cereals and bakery products rose 2.9 percent in April, its largest monthly increase ever. Dairy products, fruits, and vegetables all saw rising prices. Pork prices skyrocketed. The price of pork chops rose 7.4 percent. Other pork prices, such as roasts and ribs, rose 10 percent. Egg prices jumped 16 percent. With many people working from home, the prices of men’s suits dropped 11.3 percent. Women’s suits fell a milder 5.1 percent but women’s dresses declined 9.6 percent. The prices of women’s underwear, nightwear, swimwear, and accessories fell 5.8 percent. The index for men’s underwear, pajamas, and swimwear fell 2.0 percent. Car and truck rental prices crashed 16.6 percent after falling 6.9 percent in March and 2.2 percent. Airfares fell 15.2 percent in April and 12.6 percent.

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