The Consumer Price Index fell 0.4% in March, the largest monthly decline in five years, the U.S. Bureau of Labor Statistics said Friday, as the shutdown caused by the coronavirus pandemic kept the economy in check.
A sharp decline in the gasoline index was a major cause of the decrease, the bureau said, with reductions in airline fares, lodging and apparel also contributing.
The energy index fell 5.8% as the gasoline index dropped 10.5%. The index for new vehicles also declined in March.
In the 12 months through March, the CPI rose 1.5% after increasing 2.3% in February. Economists polled by Reuters had forecast the CPI dropping 0.3% in March and climbing 1.6% year-on-year.
Shelter remained unchanged, with increases for rent and owners' equivalent rent offsetting the decline in lodging.
Medical care, used cars and trucks, motor vehicle insurance and education all increased in March, the bureau said.
Restaurants, bars and many retailers have shut down have been forced to close their doors in an effort to stop the spread of the coronavirus. The shuttered economy has left millions of Americans unemployed.
The business closures caused by the pandemic affected March’s CPI report after data collection by personal visit was suspended on March 16.
The Labor Department said data collection last month was also affected “by the temporary closing or limited operations of certain types of establishments,” which led to “an increase in the number of prices being considered temporarily unavailable and imputed.”
The Federal Reserve launched an unprecedented "Main Street" funding support plan Thursday that will pump more than $2.3 trillion into the U.S. economy as the country battles the coronavirus pandemic.
The Fed said it would use $75 billion in Treasury capital to purchase up to $600 billion in small and midsized business loans, and lend around $500 billion to states and cities around the country.
The four-year loans will focus on companies with 10,000 employees or less, the Fed said, and will compliment the central bank's previous announcement of its intention to purchase municipal bonds.