Cost of Living Decreases in the U.S.

The U.S. consumer price index dropped 1.3 percent in the year ended in May, the most since 1950, the Labor Department said today in Washington. Prices increased just 0.1 percent last month, less than anticipated, after no change in April.

The lack of sustained gains in sales is one reason companies are finding it difficult to pass increases in fuel costs on to customers. Higher gasoline prices will probably restrain Americans’ discretionary spending at a time when the economy is showing signs of stabilizing.

Excluding food and fuel, costs climbed 0.1 percent. Compared with a year earlier, the so-called core rate increased 1.8 percent, down from a 1.9 percent 12-month gain in April.

Energy costs increased 0.2 percent in May, as a 3.1 percent rise in the price of gasoline was partly offset by declines in fuel oil and natural gas.

Food prices, which account for about a seventh of the CPI, decreased 0.2 percent in April, reflecting lower costs for all major categories including fruits and vegetables, meats and dairy products.

The core index was constrained by falling prices for public transportation, apparel and tobacco. Rents, which make up almost 40 percent of the core CPI, were also subdued. A category designed to track rental prices rose 0.1 percent.

New vehicle prices climbed 0.5 percent. Car costs may decline in coming months as automobile makers slash prices or increase incentives to revive demand and lighten bloated inventories.

Cost of Living Decreases in the U.S., Bloomberg
6/17/2009 12:25:25 PM