Consumer prices rise less then predicted in May

Posted Jun 17th 2009 1:10PM by Mark Fightmaster
Filed under: Economic Data, Recession

This morning, the Labor Department announced that its consumer price index rose less than expected during May. This data is considered the latest evidence that the recession is continuing, keeping inflation in check. According to the Labor Department, the index increased a seasonally adjusted 0.1% in May, falling short of expectations for a 0.3% rise. Taking food and energy costs out of the equation, core prices increased 0.1%, matching expectations.

The recession is forcing prices lower, with the unemployment rate advancing to a 25-year high, and factories are operating at record-low levels. Some analysts suggest that we could see a period of deflation -- which is a destabilizing period of extended declines. Although lower prices may seem good, deflation could lead to consumers delaying purchases, which could then lead to drops in production and in wage cuts.

Yesterday, a group of economists from the nation's largest banks predicted that prices will continue to fall throughout the year. The group added that core consumer prices should decline at a 1% rate by the end of the calendar year.

A JPMorgan economist added that inflation is a greater risk than deflation over the next several years, thanks to huge budget deficits, which could top $1 trillion this year and next year.

Tags: consumer prices, deflation, economists, inflation, inthenews, unemployment

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Reader Comments (Page 1 of 1)

6-18-2009 @ 2:00AM

tex said...

Watch in google THE OBAMA DECEPTION
Ironically, it is not really only about Obama, as he is just a pawn in the world’s chess game. It is really about:
a) who has the world power ( THE FED'S OIWER BROKERS)
b) why the economy is as it is
c) why the banks and no one else is getting bail outs
d) what the future of america will face shortly
e) the agenda behind the people who put Obama and prior US presidents in the white house.
Tex.