3rd Consecutive Month: Consumer Prices Fall 0.1%
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The New York Times Reports: May Consumer Prices Fall 0.1%, the Third Consecutive Month
In May, US Consumer Prices dropped for the third month in a row after COVID-19 pushed the US into a recession.
The Labor Department said Wednesday that its consumer price index fell 0.1% last month after tumbling 0.8% in April and 0.4% in March. Excluding food and energy prices, which bounce around from month to month, so-called core inflation fell 0.1%, tumbling for the third consecutive month for the first time ever.
Quarantines and social distancing rules were meant to contain the pandemic but ultimately resulted in an economic downturn for the US. COVID-19 ended a the longest economic expansion in US history, which began in 2009.
“Overall, the initial impact of the shutdowns due to the novel coronavirus is deflationary," Contingent Macro Advisors wrote in a research note. “Going forward, expect increased volatility in the coming months -- but the medium-term risks to inflation remain firmly to the downside.''
Within the last year, consumer prices went up 0.1% and core prices were up 1.2%.
Gasoline prices dropped 3.5% in May, their fifth straight decrease, and are down 33.8% over the past year. Clothing prices fell 2.3%, third straight drop, and are down 7.9% over the past year.
Food prices rose 0.7% last month, and the price of housing rose 0.2%
The Fed is trying to keep inflation at 2%. But to keep the economy from completely collapsing, the Fed slashed short-term interests rates to zero and dumped trillions of dollars into the economy.
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