The US Consumer Price Index increased 0.3 percent in May, the Bureau of Labor Statistics of the US Department of Labor reported today. Over the last 12 months the index has fallen 1.3 percent. This is the largest decline since April 1950 and is due mainly to a 27.3 percent decline in the energy index. In another report, the US current account deficit was reported to have fallen in the first quarter of 2009, to the lowest since 2001.

On a seasonally adjusted basis, the CPI increased 0.1 percent in May after being unchanged in April. The index for energy, which had declined the previous two months, rose 0.2 percent in May as an increase in the gasoline index more than offset declines in other energy indexes. The food index decreased for the fourth consecutive month, falling 0.2 percent as the indexes for all major grocery store food groups declined.

The index for all items less food and energy rose 0.1 percent in May following a 0.3 percent increase in April. The smaller increase was partly due to the tobacco and smoking products index, which turned down in May after rising sharply in March and April. In May, the indexes for shelter, new and used motor vehicles, and medical care posted increases, while the public transportation index fell 1.0 percent and the indexes for apparel and tobacco declined slightly. The index for all items less food and energy has increased 1.8 percent over the last 12 months.

"The recent data on inflation shows that the risks of deflation, which entered the minds of many central banks around the world over the last 18 months, the risks seem to be significantly attenuated," Fed Governor Kevin Warsh said Tuesday. Rather, inflation dynamics are "closer to a zone of price stability," he said.

Housing, which accounts for 40 percent of the CPI index, fell 0.1 percent for a third-straight month. Rent increased 0.1 percent - - same as owners' equivalent rent. Household fuels and utilities prices dropped 1.3 percent. Lodging away from home advanced 0.1 percent.

In a separate report, the Labor Department said the average weekly earnings of US workers, adjusted for inflation, dropped 0.3 percent in May.

SEE: Finfacts report: Inflation worriers hit the panic buttons during Great Recession; Medium-term inflation risks - - are they a serious threat?

Current Account

The US current-account deficit, the broadest measure of US international trade in goods and services, receipts and payments of income, and net unilateral current transfers (such as gifts) decreased to $101.5 billion (preliminary) in the first quarter of 2009, the smallest deficit since the fourth quarter of 2001, from $154.9 billion (revised) in the fourth quarter of 2008. The Bureau of Economic Analysis said as a share of US GDP, the deficit decreased to 2.9 percent from 4.4 percent. The previously published estimate of the current-account deficit for the fourth quarter was $132.8 billion.

• The deficit on international trade in goods decreased to $124.0 billion from $178.8 billion, as goods imports decreased more than goods exports.

• The surplus on international trade in services decreased to $32.8 billion from $34.3 billion, as services receipts decreased more than services payments.

• The surplus on income decreased to $19.3 billion from $21.1 billion, as income receipts decreased more than income payments.

• Net unilateral current transfers to foreign residents were $29.6 billion, down from $31.5 billion.

Net financial inflows were $47.1 billion in the first quarter, down from $88.3 billion in the fourth.

• US-owned assets abroad decreased $125.2 billion in the first quarter after they had decreased $114.7 billion in the fourth.

• Foreign-owned assets in the United States decreased $78.1 billion in the first quarter after they had decreased $11.9 billion in the fourth.