Coronavirus: US consumer prices fall by largest amount in five years
US consumer prices fell by the largest amount in five years in March due to the impact of coronavirus, with further decreases expected as the virus squeezes demand for goods and services.
The US labor department said that the consumer price index dropped 0.4 per cent last month due to plummeting prices for petrol, hotels, clothing and air travel.
The fall came on the back of a 0.1 per cent rise last month, and is the biggest drop since January 2015.
Economists had predicted a drop of 0.3 per cent.
The department said the coronavirus pandemic, which has led to widespread closures of businesses and restrictions on travel, had limited its ability to collect data for its survey.
As a result, the government said many indexes were based on smaller amounts of collected prices than usual, and a small number of indexes that are normally published were not published in March.
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The oil price war between Russia and Saudi Arabia, which has crashed oil prices around the world, is one of the biggest factors in the drop.
The production glut that resulted from March’s failed Opec meeting has decimated the US shale market, with oil futures down nearly 50 per cent from the start of the year.
Excluding the volatility in energy and food prices, the core consumer price index slipped by a more modest 0.1 per cent in March.
The drop is another sign of how severely the coronavirus pandemic has impacted the world’s biggest economy.
Yesterday a further 6.7m people were reported to have filed for unemployment benefits, meaning that around 17m people have lost their jobs in three weeks.
By contrast, the total number of jobless claims over the course of 2008’s financial crisis was 9m, undermining the scale of the current crisis.