Related News

Home » Business » Economy

US consumer prices record unexpected decline in March

UNITED States consumer prices dipped unexpectedly in March, leaving inflation over the past year falling at the fastest clip in more than a half-century.

The recession is expected to keep a lid on inflation as widespread layoffs dampen wage pressures and weak demand keeps companies from raising prices.

The Labor Department said on Wednesday that consumer prices edged down 0.1 percent last month as a drop in energy prices offset the biggest rise in tobacco prices in more than a decade. It was a better performance than the 0.1 percent rise in the Consumer Price Index that economists had expected.

Over the past 12 months, consumer prices have fallen 0.4 percent, the first 12-month decline since a similar drop for the year ended in August 1955.

Core inflation, which excludes energy and food, rose 0.2 percent last month, matching the gains of the past three months. It was slightly higher than the 0.1 percent rise economists expected.

Over the past 12 months, core inflation has risen 1.8 percent. While some economists have expressed fears the recession could spawn a destabilizing period of falling prices, other analysts point to the rise in core inflation as evidence that deflation remains only a distant threat.

In fact, some economists worry that all of the moves the Federal Reserve has made to fight the recession and the worst financial crisis in 70 years could be sowing the seeds for inflation troubles down the road.

In a speech on Tuesday, Federal Reserve Chairman Ben Bernanke repeated assurances that the central bank is always mindful of the threats of inflation and is ready to remove the monetary stimulus it has given once the economy starts to stabilize.

For March, energy prices fell 3 percent, reversing a 3.3 percent jump in February. Gasoline prices fell 4 percent last month, home heating oil plunged 8.5 percent and natural gas slid 4.8 percent.

Expensive tobacco

Food costs shed 0.1 percent in March. Dairy products led the decline with a drop of 2.4 percent.

More than half of the increase in costs outside of food and energy came from an 11 percent rise in tobacco prices, the biggest one-month surge in that category since December 1988.

New car prices also rose in March by 0.6 percent, but airline fares declined 2.3 percent.

Clothing costs, which had jumped in February by the largest amount in nearly two decades, posted a 0.2-percent drop in March.

The US has not had a prolonged bout of deflation since the Great Depression of the 1930s, although Japan suffered through a deflationary period during the 1990s after a real estate bubble burst there.

The 0.1 percent dip in consumer prices followed a report on Tuesday that inflation at the wholesale level fell 1.2 percent last month, a decline also heavily influenced by a plunge in energy prices.

Only last summer, Fed officials worried that a surge in energy costs could spread to other areas and boost inflation to unacceptable levels. But after the financial crisis struck in the fall, the central bank switched signals and is aggressively fighting to keep the economy from falling into an even deeper recession.


Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.

沪公网安备 31010602000204号

Email this to your friend