MercoPress. South Atlantic News Agency

April consumer inflation in the US drops for the first time in more than a year

Cautious domestic demand and strong US dollar helps keep prices down

Consumer inflation in the United States unexpectedly dropped in April for the first time in more than a year. The 0.1 percent fall in the consumer price index was the first decrease since March 2009, figures from the Labor Department showed Wednesday.

Excluding food and fuel, the so-called core rate was unchanged, capping the smallest 12- month gain in four decades.

Retailers such as Wal-Mart Stores Inc. are cutting prices to bolster sales as customers face almost 10% unemployment and rising foreclosures. The European debt crisis, which has pushed up the value of the dollar and may restrain global growth, will probably further depress prices at a time when inflation is already running below Fed policy makers’ projections.

In the 12 months ended in April, US consumer prices rose 2.2% following a 2.3% year-over-year gain the prior month. The core rate rose 0.9% from April 2009, the smallest increase since January 1966, after a 1.1% year- over-year advance the prior month.

Compared with a month earlier, energy costs dropped. Gasoline prices fell 2.4%. Food prices, which account for about 15% of the CPI, rose 0.2%, reflecting higher meat costs, today’s report showed.

Declining prices for clothing and household furnishings helped offset increases in airline fares, recreation and medical care, leading to the unchanged reading in core prices.

The housing slump is also cooling inflation. Owners- equivalent rent, one of the categories designed to track rental prices, was unchanged last month. Compared with April 2009, the gauge dropped 0.2 percent, deepening the first 12-month slide since records began in 1982.