U.S. consumer prices fell by the most in more than five years in March as the coronavirus pandemic pummeled demand, fueling concerns that the economy is heading toward deflation.
The Labor Department reported Friday that the consumer price index dropped 0.4% last month amid a sharp decline in the cost of gasoline and record decreases in hotel accommodation, apparel and airline ticket prices.
The decline in the CPI was the largest since January 2015 and was slightly below economists’ estimates of a 0.3% slide. Prices had gone up 0.1% in February before the coronavirus crisis escalated.
In the 12 months through March, the CPI increased 1.5%, the smallest advance since February 2019, after accelerating 2.3% in February.
“The March consumer price report underscores that the fallout from the coronavirus has had a large disinflationary effect on prices due to the large demand shock, plunge in oil prices, and stronger dollar,”