Consumer prices fell for the third straight month, providing some bargains to American shoppers.
The Consumer Price Index, the government’s most closely watch inflation barometer, dipped 0.1 percent in June, the Labor Department reported Friday. Less expensive energy bills were a big factor behind the drop. Prices for some food items, airlines fares, computers, telephone service and personal care products also fell last month.
So-called “core” consumer prices, which strip out volatile energy and food, rose 0.2 percent in June. That means core prices rose only 0.9 percent over the past year. That’s below the Fed’s inflation target and has core prices holding at a 44-year low.
Companies are wary of jacking up prices because consumers have cut their spending for two straight months. And factories and businesses are still operating well below full throttle.
The recent stretch of falling prices, both at the consumer and producer level, has stirred talked about deflation. It’s a widespread and prolonged drop not only in the prices of goods at stores but also real estate, stocks and wages. America’s last serious case of deflation was during the Great Depression of the 1930s.
Most economists don’t believe deflation will happen, although some Fed officials have recently raised such concerns.
“Inflation is essentially a non issue right now, and that’s good news for consumers who feel stretched and uncertain. There are some bargains to be had,” said economist Joel Naroff, president of Naroff Economic Advisors. “Once consumers get more confident and are willing to spend again, they will see that stores are filled with goods at prices they like.”
