US consumer prices declined in the 12 months through April, the latest sign that tame inflation will keep the Federal Reserve on the sidelines for the foreseeable future.
The consumer price index (CPI) of goods and services declined 0.2 percent annually in April following a 0.1 percent drop in March, the Labor Department reported on Friday. A median estimate of economists forecast CPI to decline 0.1 percent annually in April.
Compared to March, the CPI rate was 0.1 percent, unchanged from the previous month.
So-called core CPI, which strips away food and energy, increased 1.8 percent annually, following a similar increase in March. On a monthly basis, the core CPI rate was 0.3 percent, higher than the previous month’s 0.2 percent gain.
Energy prices declined in April, falling 1.3 percent. In annualized terms, energy prices were down 19.4 percent. Food prices were unchanged compared to March but were down 0.2 percent annually, official data showed.
The Federal Reserve’s preferred measure of inflation – the price index for personal consumption expenditures (PCE) – increased 0.3 percent in March, little changed from February. That was the 35th consecutive month inflation undershot the Fed’s target of 2 percent.
The Federal Open Market Committee removed any hope for a June rate hike in its April policy meetings, the minutes from last month’s meetings showed on Wednesday. In its most explicit statement yet, the Fed acknowledged that economic data were unlikely to provide convincing evidence for a rate adjustment in June, despite previous expectations.
Policymakers “thought it unlikely that the data available in June would provide sufficient confirmation that the conditions for raising the target range for the federal funds rate had been satisfied, although they generally did not rule out this possibility,” the minutes showed.
The Fed was confident that inflation would approach target levels over the next two years, stemming from rebounding energy prices, higher import prices and greater resource utilization.
The Fed’s next meetings, which are scheduled for June 16-17, will be accompanied by revised inflation, unemployment and GDP estimates.
The Commerce Department next week will release revised first quarter GDP estimates. The revised reading, which is based on more complete data, could show the US economy actually contracted in the first quarter after initial estimates showed a 0.2 percent annual gain.