US inflation falls for third straight month as coronavirus hammers economy
US consumer prices fell for a third straight month in May and underlying inflation was weak as demand remained subdued amid the recession caused by the Covid-19 pandemic.
The Consumer Price Index (CPI) fell 0.1 per cent in May, after decreasing 0.8 per cent in April, new figures from the US Labour Department showed.
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The inflation reading for May had been expected to be flat after April recorded the steepest decline since December 2008.
Year-on-year, the CPI increased 0.1 per cent in May – the smallest year-on-year rise since September 2015. Economists polled by Reuters had forecast the CPI to be unchanged in May and to gain 0.2 per cent year-on-year.
The core CPI reading, which excludes volatile food and fuel costs, fell 0.1 per cent month on month after dropping 0.4 per cent in April – the largest drop since the measure was introduced in 1957.
The dollar dropped against the yen after the US inflation reading missed estimates, slipping as much as 0.3 per cent immediately after the figures were released.
Yields on the benchmark US 10-year Treasuries fell to 0.802 per cent, from 0.811 per cent, following the release of the inflation data.
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The US Labour Department said in-store data collection had remained suspended since March 16 because of risks of exposure to Covid-19.
The department added that data collection last month was also impacted “by the temporary closing or limited operations of certain types of establishments,” leading to “an increase in the number of prices being considered temporarily unavailable and imputed.”