Is Deflation on the Horizon?
Meanwhile, the Labor Department said producer prices fell 1.9% in April -- the biggest decline in 56 years -- after a gain of 1.5% in March. The so-called core index, which excludes food and energy items, fell 0.9%, its biggest drop in a decade, after rising 0.7% in March.
The results surprised economists, or at least those surveyed by Dow Jones Newswires and CNBC, who had forecast a drop of 0.8% in the overall data and a decline of 0.1% in the core figure. The data appeared to back up comments made last week by Federal Reserve policy makers, who warned that the U.S. could be poised for a period of deflation, where prices decline over time.
However, economists said not to worry.
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