US consumer prices, industrial output drop
Friday, 17 April 2009
WASHINGTON, Apr 16 (AFP): US consumer prices in March posted their first annual drop in 54 years and industrial production fell to a decade low as data yesterday underscored the depth of recession in the world's largest economy.
The negative prices raised the specter of potential deflation but analysts were quick to rule out any immediate threat as the drop was driven entirely by falling energy prices.
The Labor Department said the consumer price index (CPI) fell 0.1 per cent in March on a seasonally adjusted basis from a month ago and declined 0.4 per cent from a year ago, the first annual drop since August 1955. The CPI, which tracks the average price of consumer goods and services purchased by households, had risen 0.4 per cent in February and most analysts had expected a 0.1 per cent month-on- month rise in March.
Core CPI, which excludes food and energy prices, increased 0.2 per cent for the third month in a row in March, thanks to a sharp increase in prices for tobacco and smoking products. The core rate was up 1.8 per cent from March 2008.
The department also said that prices in March had decreased 0.4 per cent from a year ago, "the first 12-month decline since August 1955," in what was seen as a potential deflationary threat by some analysts.
Deflation is a price decline on a sustained basis that encourages consumers to delay purchases because they expect prices to continue falling.
The annual inflation figure could continue to decline in the months ahead and "become significantly negative," said Marie- Pierre Ripert, an economist with Natixis bank.
It could hit a negative 2.3 per cent in July, as a result of a "large base effect" from oil prices that had reached record peaks above 147 dollars last year, she said.
The negative prices raised the specter of potential deflation but analysts were quick to rule out any immediate threat as the drop was driven entirely by falling energy prices.
The Labor Department said the consumer price index (CPI) fell 0.1 per cent in March on a seasonally adjusted basis from a month ago and declined 0.4 per cent from a year ago, the first annual drop since August 1955. The CPI, which tracks the average price of consumer goods and services purchased by households, had risen 0.4 per cent in February and most analysts had expected a 0.1 per cent month-on- month rise in March.
Core CPI, which excludes food and energy prices, increased 0.2 per cent for the third month in a row in March, thanks to a sharp increase in prices for tobacco and smoking products. The core rate was up 1.8 per cent from March 2008.
The department also said that prices in March had decreased 0.4 per cent from a year ago, "the first 12-month decline since August 1955," in what was seen as a potential deflationary threat by some analysts.
Deflation is a price decline on a sustained basis that encourages consumers to delay purchases because they expect prices to continue falling.
The annual inflation figure could continue to decline in the months ahead and "become significantly negative," said Marie- Pierre Ripert, an economist with Natixis bank.
It could hit a negative 2.3 per cent in July, as a result of a "large base effect" from oil prices that had reached record peaks above 147 dollars last year, she said.