On May 12, the federal government released the consumer prices report for April that makes one shudder about where the U.S. economy is heading. After the Consumer Price Index fell four-tenths percent in March it plummeted another eight-tenths percent in April.
The CPI is presently only three ticks (three-tenths percent) higher than the CPI of a year ago. Even though the average price for food at home — that is, not at restaurants — shot up in April, by the huge amount for a single month of two and six-tenths percent.
The threat of deflation is upon us. The consumer price for electric service is one of the few prices in the economy that is behaving as if the coronavirus crisis had never happened. Boy, do we wish this was so.
The CPI component for electricity decreased two-tenths percent in March, increased one-tenth in April, and is presently two ticks (two-tenths) higher than where it was a year ago. So, even with these weird things happening to consumer prices throughout the economy, the real cost of electricity continues to lessen, though now just slightly.
This trend might keep going. Yesterday’s producer prices report for April showed that the average price of natural gas sold to electric generators fell four-and-a-half percent from the prior month, and is now almost twenty-two percent lower than in April of a year ago. This is promising, since the price of natural gas to generators is a leading indicator of the price of electric service to consumers.