Consumer prices flat in April, matches estimates
Consumer prices went unchanged in April as declines in food and energy costs compensated for increases in the prices of other items, particularly tobacco products, which became sharply more costly because of a new federal tax.
The most recent consumer price index underscored the downward pressure on prices that distressed consumers have exerted in the recession. During the last year, consumer prices have dropped 0.7%, the sharpest decline over any 12-month period in more than half a century. Last month was the first time since 1955 that consumer prices had fallen compared with a year earlier.
The Labor Department’s consumer price report, released Friday, matched the expectations of economists.
Economists in one camp fear that the nation is vulnerable to a debilitating cycle of deflation similar to the one that crippled Japan during its “Lost Decade” of the 1990s and the U.S. during the Great Depression. Others fear that aggressive attempts by the Federal Reserve and the Obama administration to pull the country out of the recession will later lead to inflation.
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