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United States Inflation April 2020

United States: Price pressures weaken markedly in April

Consumer prices fell 0.8% over the previous month in April, coming after March’s 0.4% fall and driven by a huge drop in energy prices. Inflation moderated from 1.5% to 0.3%, the lowest rate since late 2015, amid low oil prices and weak domestic demand. Core price pressures also softened notably.

The core personal consumption expenditures price index—a gauge of household spending closely tracked by the Fed—was up 0.5% in annual terms in April, down from March’s 1.3% increase.

April’s data provides further confirmation the Covid-19 crisis has been largely disinflationary in nature as the demand shock has outweighed upside pressure from disrupted supply chains. Inflation should stay tepid in the months ahead on continuing economic slack.

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