U.S. prices dropped in April

May 16, 2013 at 10:03 AM

WASHINGTON, May 16 (UPI) -- U.S. consumer prices dropped 0.4 percent in April, pulling the 12-month inflation rate down to 1.1 percent, the U.S. Bureau of Labor Statistics said Thursday.

Prices also dropped in March, sliding 0.2 percent. An extended period of falling prices, known as deflation, is considered disruptive to the economy, as consumers tend to hesitate to spend money if they assume prices will fall further.

Energy prices, which have dropped five of the past six months, led the declines, falling 4.3 percent with some energy categories dropping further, the report on the Consumer Price Index said. Gasoline prices were off 8.1 percent on the month with an unadjusted 12-month decline of 8.3 percent. Fuel oil prices fell 4.4 percent in April from March and are off 5.6 percent from April 2012.

Food prices edged higher, climbing 0.2 percent in April, while posting an unadjusted annual rate of 1.5 percent.

Core prices, which exclude the volatile categories of food and energy, rose 0.1 percent in April. The annual rate for core prices, now at 1.7 percent, remains safely below the U.S. Federal Reserve's target of 2 percent or below as a healthy inflation rate.

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