Consumer prices were unchanged in April as both food and energy costs declined to offset gains elsewhere. Prices over the past year fell by the largest amount in more than a half-century, the government says. The disappearance of inflation has been a product of the country’s deep recession as surging job layoffs dampen wage pressures and weak consumer demand keeps a lid on price increases. Some economists are worried about a dangerous bout of falling prices, but most say that possibility remains remote because the Federal Reserve has responded with force to combat the current downturn.
Meanwhile, the Fed said the nation’s industrial production fell in April by the smallest amount in six months, more evidence that the pace of the economy’s decline is slowing. The Labor Department said its Consumer Price Index was flat last month, meeting economists’ expectations. The docile inflation performance reflected a second monthly drop in energy costs and a third straight decline in food prices. Over the past year, consumer prices have fallen 0.7%, the largest 12-month decline since a similar drop for the 12 months ending in June 1957. The Fed says output by the nation’s factories, mines and utilities fell 0.5% last month, after revised declines of 1.7% in March and 1% in February. Analysts expected a drop of 0.6% last month.
