WASHINGTON, May 16 (UPI) -- The Labor Department said Friday the all urban consumer price index, a key measure of inflation at the retail level, posted its largest decline in 18 months during April while the core rate of inflation remained flat for the second consecutive month.
The government agency said the CPI fell 0.3 percent during April after rising 0.3 percent in March. The decline was the largest since October 2001.
The core index, which excludes food and energy items, remained unchanged during the month after posting no change during the previous month. April and March marked the first time that core inflation failed to rise in consecutive months since November and December of 1982.
Economists on Wall Street were expecting the CPI to decline 0.1 percent and the core rate was expected to rise 0.1 percent.
The report showed that this year, consumer prices are rising at a 2.8-percent annual rate compared with a 3.4-percent pace during the same period last year. Core inflation is rising at a 0.6-percent annual rate compared with 2.1-percent clip during the same period last year.
The CPI report follows a Labor Department report Thursday that showed the producer price index, a key measure of inflation at the wholesale level, dropping 1.9 percent in April, its biggest decline in 56 years and highlighting the Federal Reserve's worry that the economy faces a deflation risk for the first time since the Great Depression.
The consumer price index is a measure of the average price level of a fixed basket of goods and services purchased by consumers. Monthly changes in the CPI represent the rate of inflation.
The consumer price index is the most widely followed indicator of inflation in the United States. Inflation is a general increase in the price of goods and services.
Investors. preoccupied by worries the economic recovery might fizzle, have paid little attention to inflation statistics recently. Fed Chairman Alan Greenspan has described the risk of inflation in the near term as "remote."
The latest report on the CPI showed energy prices, which account for about a 14th of the index, dropped 4.6 percent in April after rising the same 4.6 percent in March. Gasoline prices sank 8.3 percent in April, while fuel oil costs sank 14.9 percent.
The Labor Department said the cost of new cars fell 0.4 percent last month after rising 0.2 percent in March. Clothing prices fell 0.6 percent after falling 0.4 percent a month earlier and the costs of personal computers declined 1.6 percent.
Food prices, which account for about a fifth of the index, slipped 0.1 percent after rising 0.2 percent a month earlier.
The report showed service prices inched up 0.1 percent and the cost of medical care rose 0.2 percent. Housing costs, which include some energy costs and account for one-third of the index, fell 0.1 percent in April after rising 0.4 percent.