The coronavirus may have caused some shortages—famously for toilet paper—but the larger effect has been to depress demand and send consumer prices lower.
The consumer price index dropped 0.4 percent in March, the biggest decline in five years, the Labor Department said Friday. Compared with a year ago, prices are up just 1.5 percent, a rapid turnaround from the 2.3 percent annual gain recorded a month earlier.
Much of the decline was from the familiar sources of food and energy, often volatile categories that economists often exclude to look at so-called “core inflation.” Gasoline prices plunged 10.5 percent in March.
Core inflation was down in March, the first decline in ten years. That raises the prospect that the economy could be entering a deflationary cycle, which puts pressure on employment, income, and production.
Travel related goods and services saw some of the sharpest monthly declines. Airline ticket prices fell 12.6 percent in March. Car rental prices dropped 6.9 percent. Hotel and motel prices fell 7.7 percent.
Prices for women’s dresses, which are tracked separately from other apparel items in the CPI data, fell 5.7 percent and are down 10 percent from a year ago. Women’s apparel more broadly was off by 3.1 percent. Men’s apparel was flat for the month.
Infant clothing prices were also off sharply, a 4.3 percent decline in March. Infant furniture prices fell 6.6 percent.
People do not appear to have taken to making their own clothing. Sewing machine and sewing supply prices fell 7.1 percent for the month and are down 11.2 percent from a year ago.