Annual inflation was slightly negative in April because of the falling cost of energy, even as other prices showed strong month-to-month gains.
The consumer price index was down 0.2 percent annually in April, the Bureau of Labor Statistics reported Friday morning, slightly more than the 0.1 percent drop the month before.
Most of that decline, however, was attributable to falling energy prices, which were down 20 percent annually.
Core inflation, a less volatile gauge of price changes that strips out the effects of energy and food price movements, stayed relatively firm, at 1.8 percent annually.
In fact, core inflation was up 0.3 percent on the month, adjusting to seasonal fluctuations, driven by increases in the cost of shelter, medical care and home furnishings, among other indices.
Over the past year, U.S. workers have been received a slight boost in real earnings thanks to slow cost of living increases. Average hourly earnings were only up 2.2 percent annually in April, according the Bureau of Labor Statistics. Accounting for the fact that inflation was negative over that period, workers saw a 2.3 percent real increase in hourly earnings.
Most of that has come in the form of lower energy prices, following the collapse in the price of oil over the past year. The price of a barrel of Brent crude oil has fallen from nearly $110 last summer to about $65.
The drop in energy prices has offset modest increases in the costs of food, shelter and a range of other goods and services.
The Federal Reserve is closely watching inflation and expectations of inflation for signs that the economy is gaining strength. After its April meeting, the central bank’s monetary policy committee announced that it would keep short-term interest rates near zero until officials were “reasonably confident” that inflation is heading toward the Fed’s 2 percent goal over the medium term.
Inflation, in the Fed’s preferred measure, has not hit that mark since early 2012. The Fed’s movements are closely watched because its target interest rate affects interest rates through the economy, including on credit cards, mortgages and savings accounts.
Despite the fact that inflation has remained significantly below its target, Federal Reserve officials, including Chairwoman Janet Yellen, have said that they expect it to bounce back in the medium term. Most of the recent decline in inflation, they have said, is the result of “transitory” factors such as oil prices and a rising dollar that should dissipate in the months ahead, while the overall momentum in labor markets will continue to push prices up.
