Consumer prices in the United States declined 0.4% in April. This marked a second consecutive monthly decline following a 0.2% dip in March and pushed the year-over-year rate of increase down to 1.1%, the lowest annual pace of price growth since November 2010, from 1.5% in March.
The decline in the headline U.S. inflation rate largely resulted from an outsized 4.3% monthly decline in energy prices as gasoline prices plunged 8.1%, building on the already large 4.4% decline in March. This left gasoline prices 8.3% below their level last year at this time.
Food prices provided some modest offset, rising 0.2% in April. As well, excluding both the energy and food components, core prices continued to rise, although by a modest 0.1% that matched the pace of increase in March.
The modest monthly increase resulted in the year-over-year rate of growth in the core measure dipping to 1.7% from 1.9% in March.
"The lack of underlying inflationary pressures," according to experts at RBC Economics, "continues to provide the Fed with flexibility to focus on the labour market half of its mandate.
"Our forecast assumes that this will result in the central bank continuing asset purchases through the end of this year and maintaining Fed funds within the current range of 0% to 0.25% likely into 2015."
