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Consumer Prices Flat in April
The Labor Department said its Consumer Price Index was
flat after falling 0.1% in March. However compared to April
of last year, consumer prices declined 0.7%, the biggest
12-month drop since June 1955. The report indicates that
weak consumer demand over the past year, due to rising
unemployment and a slow economy, have robbed companies of
pricing power. However, the threat of deflation has
diminished over the past few months as the recession appears
to be bottoming. In fact, core prices, which exclude food
and energy items, rose 0.3% in April, helped by a large gain
in the cost of tobacco as a government excise tax went into
effect. Energy prices fell 2.4% in April, after dropping
3.0% the previous month.
Meanwhile, a surge in food costs pushed wholesale prices
up in April. The Labor Department said the Producer Price
Index grew 0.3% after declining 1.2% in March. Food prices
jumped 1.5% in April, the biggest increase since January
2008. Excluding food, the Producer Price Index would have
increased 0.1%. Core producer prices, excluding food and
energy costs, rose 0.1% in April, after a flat reading in
March. Compared to April 2008, prices received by producers
plunged 3.7%, although core producer prices grew 3.4%. The
difference reflects the massive deflation in energy prices
brought on by the recession.
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Date Last Updated: 05/20/2009
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