Prices for goods fell in the U.S. in April, defying predictions that tariffs on Chinese imports and metals would squeeze the bank accounts of U.S. households.
Compared with a year earlier, prices of goods were 0.5 percent lower, according to the government’s personal consumption price index. This was the fifth consecutive month of year-over-year deflation.
Prices of durable goods, which are thought to be those most likely to be affected by metals tariffs, are down even more. On a 12-month basis, these are down 1.8 percent. They have been down on an annual basis every month since at least September.
On a one-month basis, durable goods prices fell 0.4 percent, the third consecutive monthly decline.
Nondurable goods ticked up slightly, by 0.2 percent compared with a year ago. This was the second monthly price hike after prices fell in January and February. Compared with March, nondurable good prices were up 0.5 percent, largely driven by higher energy costs.
The overall PCE price index was up 1.51 percent from a year earlier, while the core PCE–which excludes fuel and good–rose 1.57 percent. Prices for services have been rising thanks to a tightening labor market.
Price data has consistently defied the dire predictions from many economists about consumers being hurt by tariffs in the form of higher prices. Economists at the Federal Reserve have continued to insist, based on economic models or flawed analysis of import data, that households are paying a price for tariffs despite a lack of evidence.
The Federal Reserve aims for inflation to run at about a 2 percent rate.