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The numbers: The cost of some consumer goods such as groceries have spiked for households, but inflation more broadly fell again in May owing to a slump in demand triggered by the coronavirus pandemic.
The consumer price index slipped 0.1% last month after a much larger decline in April, the government said Wednesday. It was the third straight decline.
Inflation has softened considerably in the past several months almost to the point of being erased. Consumer prices have risen just 0.1% in the last 12 months, down from a 2.4% yearly rate as recently as February.
Another measure of inflation that strips out volatile gas and food prices, known as core CPI, also declined for the third month in a row — the first time that’s ever happened.
Read:U.S. entered recession in February after end of longest expansion in history
What happened: The cost of gasoline dropped 3.5% in May, doing much of the work in reducing overall consumer prices. Prices also fell for clothing, car insurance, airfare, hotel rooms and used vehicles.
The cost of groceries rose sharply again, however, reflecting a scarcity of some goods in high demand as well as shortages caused by viral outbreaks at meat-packing plants and other food-producing companies. Beef prices in particular have surged.
The so-called food-at-home index has soared 4.8% in the past 12 months.
The cost of shelter — rents and home prices — have also continued to edge higher. Rents rose 0.2% in May. Prices also increased for alcohol, medical care and new cars and trucks.
Read:U.S. regains 2.5 million jobs in May, unemployment falls to 13.3%
Also:Revisiting that funky drop in unemployment to 13.3%: Nobody really believes it
Big picture: Consumers have had to cope with scattered prices increases for some goods such as sanitizer, toilet paper, meat and other food. Yet the cost of most goods and services have fallen after the pandemic shut down most of the economy.
Companies have cut prices to try to drum up sales, especially those in industries such as leisure, hospitality and travel that have suffered a major loss of customers due to social distancing.
The government is pumping trillions of dollars into the economy to prevent a long recession and it could eventually add to upward price pressures, but the day when that happens seems very far off. Inflation is unlikely to pose a problem to the U.S. economy for quite some time.
Read: Small businesses turn more optimistic, NFIB says, and expect ‘short-lived’ recession
Market reaction: The Dow Jones Industrial Average DJIA, -1.08% and S&P 500 SPX, -0.78% were set to open slightly higher in Wednesday trades.
