- US consumer prices fell 0.1% in May, the Labor Department reported Wednesday, following April’s record 0.8% slump.
- It’s the first time the consumer-price index has ever declined for three months in a row, the Labor Department said.
- One spot where prices rose was the cost of groceries, as consumers are eating more meals at home due to the pandemic.
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US consumer prices fell for a third straight month in May as the coronavirus pandemic continued to weigh on demand.
The consumer-price index declined 0.1% in May, the Labor Department reported Wednesday. The median economist estimate was for a flat reading of the index after the April decline of 0.8%, which was the biggest since 2008.
The core CPI, which excludes the volatile costs of food and fuel, fell 0.1% in May after a 0.4% decline in April. Consumer inflation rose 1.2% on the year in May, the smallest year-over-year increase since 2011, after gaining 1.4% in April.
“This is the first time this index has ever declined in three consecutive months,” the Labor Department said in the Wednesday report.
US CPI will continue to be closely watched as slumping prices could lead to deflation as the US economy reopens from the coronavirus pandemic. Still, as consumers have been stuck at home and thus shifted spending habits away from things such as air travel and clothing, it’s potentially made the measure less representative of prices.
Groceries were one spot where costs continued to rise, gaining 1% in May following a 2.6% bump in April, as consumers eat more of their meals at home due to the coronavirus pandemic.
Even though some states reopened their economies in May, and all 50 had at least relaxed some restrictions, prices of clothing, lodging, gasoline, and car insurance all dipped. Motor vehicle insurance fell a record 8.9% in May, while apparel fell 2.3% after a 4.7% drop in April. Airfares declined 4.9% during the month.
Overall, the May data is “a very soft report,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a Wednesday note. Still, it could be the last report to show a “COVID-driven” monthly drop in core CPI.
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