Washington, D.C. – Inflation has essentially disappeared, and that gives the Federal Reserve more room to keep interest rates at record lows. Consumer prices fell in April for the first time in more than a year.
The Fed now appears more likely to keep rates at record-low levels well into next year, economists say. Paul Ashworth, senior U.S. economist at Capital Economics, said he thinks the Fed won’t start raising rates until late next year – and possibly not until 2012.
Declining gas prices pulled overall prices down 0.1 percent last month. Gas prices are predicted to sink lower still this summer.
Core inflation, which excludes volatile food and energy prices, was flat in April. Over the past 12 months, it has risen just 0.9 percent – the smallest increase in 44 years.