MNI DATA IMPACT:US April Core CPI Sees Largest Drop in History

--Energy, Commodities Creating Disinflationary Pressure Amid Lockdowns

By Ryan Hauser

     WASHINGTON (MNI) - U.S. consumer prices are facing a jolt of

disinflationary pressure due to a sharp decline in energy and commodity prices,

according to a Bureau of Labor Statistics report released on Tuesday morning.

     The Consumer Price Index for April fell by -0.8%, the largest

month-over-month decline since December 2008 (when the index dropped by the same

rate). The drop in CPI matched market expectations, pushing year-over-year CPI

inflation to 0.3%.

     Core CPI, however, fell by -0.4% in April, outpacing the expected -0.2%

decrease. The drop in core CPI was "the largest monthly decline in the history

of the series, which dates to 1957," the BLS said.

     The biggest factor in April's CPI drop came from the gasoline index, which

fell by -20.6%. But prices also felt downward pressure from apparel, which saw a

-5.7% decrease, and motor vehicle insurance, which fell by -7.2%, as many

self-quarantined Americans are driving less and demanding less from non-food

retailers

     Airline fares also contributed to the decline, falling -15.2% while lodging

away from home dropped -7.1% following a -6.8% drop in March as consumers

radically curtail their travel amid lockdowns and social distancing efforts.

     Food indexes for April rose, however, with the price index for food at home

registering the largest monthly increase since February 1974, according to the

BLS. 

     Indexes for rent, owners' equivalent rent, and medical care all increased

in April, though these increases were much more in line with rises typically

seen over the last three months. 

     Both rent and owners' equivalent rent showed very slight slowing growth,

dropping a tenth to 0.2% in April from a month earlier as analysts continue to

watch for rent freezes and concessions from landlords as a spike in unemployment

puts pressure on renters.

--MNI Washington Bureau; +1 202 371 2121; email: ryan.hauser@marketnews.com

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