Economy

As 16.6 million Americans sit unemployed, what’s going on with consumer prices?

Source: CNN

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With the current unemployment rate in the United States standing at a staggering 16.6 million (and climbing), one other indicator of the economy that has not been as widely publicized is the consumer price index.

The consumer price index is measured by taking the aggregate of the most commonly purchased goods and services within a nation and measuring it against the purchasing power of that nation’s currency.

Last month, consumer prices fell by the most in five years. Economists are predicting that prices will continue to fall for the foreseeable future, possibly leading to deflation.

For Gus Faucher, the chief economist at PNC Financial in Pittsburgh, deflation is looking increasingly likely.

“Deflation is likely to take hold over the next few months as businesses slash prices in response to much lower demand from the coronavirus outbreak and associated restrictions on movement.”

Since labor statistics have started being recorded, both airlines and hotel lodging prices have fallen to historic lows, with airline fares dropping 12.6 percent between February and March, and hotel lodging costs down 7.7 percent.

The energy sector is another area that has seen a dramatic downturn in prices.

With movement controls imposed around the nation, demand for gas has accordingly plummeted, leading to US gas prices falling 10.5 percent, the largest drop in four years.

Changes in gas price have also largely been affected by the global price of oil and production wars among major global oil producers.

Meanwhile, two industries that have seen increases in sector prices include the food and alcohol industries.

With millions of consumers hoarding food and alcohol, the price of these products have been driven up. On its own, the increase in food prices over the last two months has been the largest since 2014.

The expense of dining at home has reportedly risen by 0.5 percent for two consecutive months, the fastest rise in nearly six years. Furthermore, wine and beer prices have, together, risen 2.4 percent in three months.