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Will COVID-19 Cause Deflation to Show Up?


On June 10, 2020, the Department of Labor released CPI numbers for May and there was a chorus singing deflationary tunes for the rest of the week. Will the chorus get louder over the coming months or lose its voice in the heat of the summer?


This data adds another worry to any economic recovery – whether it’s U-shaped, V-shaped or doesn’t take any shape at all – as deflation is now a real possibility. In fact, this is the first time in over 60 years that core CPI has dropped for three consecutive months.


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