A key measure of U.S. consumer prices declined in April by the most on record as travel and apparel spending collapsed during the coronavirus pandemic.
The core consumer-price index, which excludes volatile food and fuel costs, fell 0.4% from the prior month after a 0.1% decrease in March, Labor Department figures showed Tuesday. That’s the biggest drop in data back to 1957. Compared with April of last year, the core CPI rose 1.4%, the smallest annual gain since 2011.
The overall CPI declined 0.8% in April from a month earlier, the most since December 2008, as gasoline prices plunged 20.6%. Annual consumer inflation slowed to 0.3%, the smallest increase since 2015.
But the cost of food at home surged 2.6% from the prior month, the most since 1974, as Americans stocked up at grocery stores. Prices for bread, chicken, carbonated drinks and snacks all posted record increases, as did household paper products.
The report adds inflation to the list of economic indicators showing an historic impact from the Covid-19 pandemic. A sustained trend of declining prices would spur worries about deflation, exacerbating concern that the recovery from the deep economic downturn will be very slow. Federal Reserve policy makers often look to the core index for a better gauge of underlying price trends.
Prices for apparel, motor-vehicle insurance, airfares and hotel stays all posted record monthly declines as Americans all but stopped driving, flying and buying new clothes during the pandemic. Those all contributed to the unprecedented drop in the core index.
The cost of services, which makes up almost 63% of the CPI, dropped 0.3% in April, the biggest slide since the end of 1982.
Energy prices slumped 10.1% from March, driven by the biggest drop in the cost of gasoline since 2008.
The Bureau of Labor Statistics said it was unable to collect as much data as usual because in-person collection was suspended and some establishments were temporarily closed. “Many indexes are based on smaller amounts of collected prices than usual, and a small number of indexes that are normally published were not published this month,” the BLS said in the report.
For commodities and services prices, about 34% of prices went uncollected in April 2020, compared with 14% in April 2019, according to the BLS website.
A separate Labor Department report on Tuesday showed average hourly earnings, adjusted for price changes, rose 7.5% in April from a year earlier, a record in data back to 2007. That figure is partly derived from the nominal hourly earnings figure in last week’s employment report, which surged because many low-wage workers lost their jobs and were thus removed from the calculation.
— With assistance by Edith Moy, and Sophie Caronello
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