gas prices on display at a station in Montpelier, Vt.
Toby Talbot/AP
WASHINGTON -- A sharp drop in gasoline costs led U.S. consumer prices to tumble in April by the most in more than four years, while a gauge of underlying inflation was so weak it could worry the U.S. Federal Reserve.

The Labor Department said Thursday its Consumer Price Index slipped 0.4 percent, the biggest decline since December 2008 when America was suffering some of the darkest days of its financial crisis. Analysts had expected a more modest 0.2 percent decline in last month's prices.

The signs of muted inflation pressures could bolster the case for the Fed to remain on its very easy monetary policy path, despite divisions among policymakers over money printing to buy bonds.

In the 12 months through April, consumer prices rose 1.1 percent. That is well below the Fed's 2 percent inflation goal. The U.S. central bank targets a different gauge of prices that tends to run cooler than the Labor Department's index.

Much of April's decline in prices was fueled by an 8.1 percent dive in gasoline costs, the biggest decline since December 2008.

However, the weakness in the index also extended to a measure of underlying inflation that strips out volatile energy and food prices.

That gauge rose just 0.1 percent, and was up only 1.7 percent from a year earlier. Apparel prices dropped 0.3 percent.

The annual reading for core inflation was at its lowest since June 2011 and could stoke concerns over cooling demand in the U.S. economy, or perhaps even the risk of outright deflation.

Most economists and investors don't think deflation is very likely for America in the coming years, but it would be a central banker's nightmare. Deflation involves spiraling declines in prices and wages and is difficult for policymakers to combat.

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Well, we are now paying $4.29 in Mpls. Don't look like lower gas prices to me. They just shot up almost a $1 a gallon here from their lowest recently. Something feels very fishy to me. Me thinks they thinks we are stupid and believe what they say. To me it all boils down to greed.

May 17 2013 at 8:43 AM Report abuse rate up rate down Reply

When in Doubt.

Lie.......lie..........lie !

CPI is Lame in 2013.

High Tech is supposed to make Everyman rich !

May 17 2013 at 4:46 AM Report abuse +1 rate up rate down Reply

what? gasoline just went up 23 cents a gallon

May 16 2013 at 6:11 PM Report abuse +1 rate up rate down Reply
crazy ray

0.4% is a tumble? The author must have serious issues with proportionality. Or maybe getting noticed is more important than being accurate.

May 16 2013 at 11:55 AM Report abuse +1 rate up rate down Reply

Never believe the stats the Gvt. tells you about inflation. It`s a coverup of the actual spiraling inflation. More smoke and mirrows to hide the real figures. They don`t use the same things each time they do their figuring. It`s done on a varied selection of items that tend to stay steady in price. Then they use different methods of calculation.
Remember this. Real figures dont lie but real liars figure.

May 16 2013 at 10:55 AM Report abuse +1 rate up rate down Reply

This is a crock! In Chicago( cook county) gas prices are going up averaging $4.29 a gallon. In Alabama gas is $3.20 a gallon.
As for food I can get a whole irradiated chicken for .98 cents a pound. An actual fresh chicken is about $9.00 a pound. Everyone is after money so do the best you can

May 16 2013 at 10:10 AM Report abuse rate up rate down Reply

What a crock. BLS is quoting from the CPI-W that includes food and energy prices, but to adjust COLA's such as social security, they use CPI-U which excludes food and energy. Another example of David Copperfield economics -- now you see it, now you don't.

May 16 2013 at 10:05 AM Report abuse +1 rate up rate down Reply