The Consumer Price Index, the government’s most closely watched inflation gauge, dipped 0.1 percent in June, the Labor Department said Friday. Lower energy bills were a big factor behind the drop.
Prices for some food, airline fares, computers, phone service and personal-care products also fell in June. When you exclude the volatile categories of energy and food, prices were essentially flat for the month. Core prices have risen only 0.9 percent over the past year, below the Fed’s inflation target. Core inflation is at a 44-year low.
The recent stretch of falling prices, at the consumer and wholesale level, has stirred talk of possible deflation — a widespread and prolonged period of falling wages and declining prices on retail goods, real estate and stocks. Most economists do not think deflation will happen, though some Fed officials have recently raised such concerns.
Because inflation as measured by the government has essentially disappeared, the Federal Reserve has even more leeway now to keep a key interest rate at a record low near zero. The Associated Press
