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Sunday 17th of May 2009
May 15, 2009

US inflation in largest annual fall since 1955


by Kay Murchie
”US

The US Labor Department has announced today that US consumer prices remained unchanged in April - in line with expectations.

However, on an annualised basis, inflation fell 0.7% on April last year - the steepest decline in 54 years.

Core prices, excluding energy and food, rose by 0.3% in April compared with March, which was more than expected, this was boosted by a sharp increase in federal tobacco taxes on 1 April.

There have been fears that the recession in the US may lead to a prolonged period of falling prices - known as deflation.

A short period of deflation (where prices fall rather than increase) could be a serious threat to the economy because it deters consumers and businesses from spending in expectation of falling prices

Paul Ashworth, of Capital Economics, said: “We still expect core inflation to moderate sharply in the second half of this year and through 2010.”

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