Economic Report: Coronavirus triggers record price drops for airfare, clothes and car insurance—but not these household staples
Pandemic shocks economy, almost brings inflation to standstill
The massive shock to the economy from the coronavirus squelched inflation in April by triggering record price declines for many goods and services such as clothes, public transportation, hotel rooms and plane tickets.
The consumer-price index — a measure of the cost of living — sank 0.8% in April to mark the biggest decline since the heart of the 2007-09 recession. It also matched the third-biggest decline ever.
Huge price declines weren’t a surprise. Many businesses were required to close as governments sought to slow the spread of the disease. Most Americans have stayed at home, resulting in empty retail stores, subways, buses and airports.
Not all prices sank, however.
Many staples at grocery stores saw large price increases. In some cases a rush on products such as toilet paper drove prices higher.
In other cases, supply disruptions caused by the pandemic have led to shortages. The cost of beef, pork, chicken and eggs, for example, have all risen because of viral outbreaks that have seized up meat processing plants.
Still, inflation overall has fallen sharply. The pace of inflation over the past 12 months dropped to just 0.3% in April from as high as 2.5% at the start of the year. It’s the smallest year-over-year increase in five years.