Consumer prices in the U.S. fell 0.1% on a seasonally adjusted basis in April as energy, housing, auto and apparel prices declined, the Labor Department reported Wednesday.
It was the first decline in the consumer price index since March 2009. The consumer price index is up 2.2% in the past year.
The core CPI, which excludes food and energy prices to get a better view of underlying inflation, was unchanged in April, lowering the year-over-year increase in core inflation to 0.9%, the lowest rate since January 1966.
The inflation numbers were better than expected. Economists surveyed by MarketWatch nailed the 0.1% drop in the headline CPI, but were expecting a 0.1% gain in the core rate.
The CPI report showed few inflationary pressures in the economy, and should give a green light to the Federal Reserve to worry more about slow economic growth and fragile financial markets and less about inflation. With unemployment near 10% and so much idle capacity in factories, offices and stores, economists believe powerful disinflationary forces still are at work, at least in the medium term.
In April, energy prices fell 1.4% on a seasonally adjusted basis, as gasoline prices fell 2.4% and natural gas prices dropped 4.4%. Energy prices actually rose 1.4% on a not-seasonally adjusted basis, but that's not as much as they typically increase in April.
Energy prices are up 18.5% in the past year. Excluding energy, consumer prices are up 0.9% in the past year.
Food prices rose 0.2% in April, led by a 1.4% increase in meat prices, the largest gain in six years. Prices for dairy, fruits, vegetables and cereals fell. Prices of food for home consumption are flat over the past year.
With the inflation rate falling, real hourly earnings (inflation-adjusted) rose 0.l% in April and real weekly earnings rose 0.4%. In the past year, inflation-adjusted hourly earnings have fallen 0.6%. Real weekly earnings are flat.
Shelter prices, which account for 32% of the CPI, continued to hold down the overall inflation rate in April. Rent of primary residence and owners' equivalent rent were unchanged. Utility prices fell 0.4%. Shelter prices are down 0.6% in the past year.
Prices of new and used vehicles fell 0.2% in April.
Apparel prices fell 0.7% in April and are down 0.9% in the past year.
Some prices were rising. Medical care prices rose 0.2%, the smallest gain since December. Drug prices rose 0.1%, while medical services prices increased 0.3%.
Airfares increased 2.2%.
Education prices rose 0.5%. Prices for personal care goods and services fell 0.1%.
Commodity prices dropped 0.4%, while services prices increased 0.1%
