Consumer prices have posted their largest monthly drop since the Great Recession.
According to newly released figures from the Labor Department, the consumer-price index decreased by 0.8% in April — the second month in a row that prices have fallen since the coronavirus pandemic swept the United States. It also marks the largest decline since December 2008.
Excluding food and energy, the index slumped 0.4% — the steepest such loss since the start of record-keeping, which dates back to 1957.
Federal and state measures, including stay-at-home orders and closures of non-essential businesses, to stem the spread of COVID-19 led to a disruption in the demand for a wide range of goods and services. Oil prices plummeted; airfares hit some of their cheapest levels; and retailers implemented steep markdowns and discounts in order to move seasonal or underperforming items.
Apparel prices saw a significant dip of 4.7% last month: While men’s and boys’ clothing dove 4.6%, the women’s and girls’ category slid 5.4%. Footwear — which is a subset of the apparel sector — sank 3.9%, with men’s and women’s shoe prices recording respective dips of 1.1% and 5.2%.
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The figures come two weeks after the Commerce Department reported that America’s gross domestic product — a measure of the output of goods and services — shrunk at a seasonally adjusted annual rate of 4.8% in the first three months of the year.
Although some states — including Colorado, Georgia, South Carolina and Tennessee — have begun to reopen in phases, economic activity is still well below levels prior to the health crisis. Many Americans are holding onto cash over fears of another recession, particularly as employers across the board have resorted to furloughs and layoffs that have left a staggering 33 million people unemployed over the course of a seven-week period. (These coronavirus-related job losses have wiped out all gains in the labor force since the Great Recession.)
Many economists expect the economy to contract even more in the second quarter, taking into account the month of April — most of which individuals and companies are spending under lockdown. Experts are anticipating a rebound in the second half of the year.