April Inflation Near Zero

Annual inflation for the 12 months ending in April was 0.33% a full 2% below February’s 2.33%. The CPI index itself fell to 256.389 down from 258.115 in March creating MONTHLY deflation although there was still slight ANNUAL inflation. Prices falling on a monthly basis but rising on an annual basis is called disinflation. Currently, the inflation rate is well below the FED’s target 2% rate and very near zero. The FED has dropped the FED Funds rate to virtually zero and has instituted massive quantitative easing.

Monthly Inflation:

According to the BLS commissioner’s report, “The Consumer Price Index for All Urban Consumers (CPI-U) declined 0.8 percent in April on a seasonally adjusted basis, the largest monthly decline since December 2008, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 0.3 percent before seasonal adjustment. A 20.6-percent decline in the gasoline index was the largest contributor to the monthly decrease in the seasonally adjusted all items index, but the indexes for apparel, motor vehicle insurance, airline fares, and lodging away from home all fell sharply as well. In contrast, food indexes rose in April, with the index for food at home posting its largest monthly increase since February 1974. The energy index declined mostly due to the decrease in the gasoline index, though some energy component indexes rose.”