U.S. consumer prices fell for a third straight month in May and underlying inflation was weak as demand remained subdued amid a recession caused by the COVID-19 pandemic.
The Labor Department said on Wednesday its consumer price index dipped 0.1% last month after plunging 0.8% in April, which was the largest decline since December 2008.
In the 12 months through May, the CPI gained 0.1%. That was the smallest year-on-year rise since September 2015 and followed a 0.3% increase in April. Economists polled by Reuters had forecast the CPI would be unchanged in May and gain 0.2% year-on-year.
The National Bureau of Economic Research, the arbiter of U.S. recessions, declared on Monday that the economy slipped into recession in February. Nonessential businesses were shuttered in much of the country in mid-March to slow the spread of COVID-19, the respiratory illness caused by the novel coronavirus, almost bringing the economy to a halt.
Excluding the volatile food and energy components, the CPI slipped 0.1% in May after decreasing 0.4% in April, the largest drop since the series started in 1957. The so-called core CPI fell in March for the first time since January 2010.
May marked the first time that the core CPI has dropped for three consecutive months. In the 12 months through May, the core CPI rose 1.2%, the smallest gain since March 2011. The core CPI increased 1.4% year-on-year in April.
The Federal Reserve tracks the core personal consumption expenditures (PCE) price index for its 2% inflation target. The core PCE price index increased 1.0% on a year-on-year basis in April, the smallest advance since December 2010. May’s core PCE price index data will be released at the end of the month.
The Labor Department said in-store data collection had remained suspended since March 16 because of risks of exposure to COVID-19. The department added that data collection last month was also impacted “by the temporary closing or limited operations of certain types of establishments,” leading to “an increase in the number of prices being considered temporarily unavailable and imputed.”
Many indexes are being based on smaller amounts of collected prices than usual, and a small number of indexes that are normally published were not published in May.