WASHINGTON – U.S. consumer prices fell in November for the first time in six months, pointing to muted inflation pressures that should allow the Federal Reserve to stay on its ultra-easy monetary policy path as it nurses the economy back to health.
The Labor Department said on Friday its Consumer Price Index dropped 0.3 percent last month as a sharp decline in gasoline prices offset increases in other areas. It was also the largest drop since May and followed a 0.1 percent gain in October.
Economists polled by Reuters had expected consumer prices to fall 0.2 percent.
The so-called core CPI, which excludes food and energy prices, edged up 0.1 percent after rising 0.2 percent in October. Although food prices rose 0.2 percent in a lagged response to the summer drought, price pressures remain benign.
The Fed said on Wednesday it expected to hold interest rates near zero until unemployment falls to at least 6.5 percent and as long as inflation does not threaten to break above 2.5 percent and inflation expectations are contained.
The U.S. central bank also replaced an expiring stimulus program with a fresh round of Treasury debt purchases, to help speed up economic growth in the near-term. Labor market slack is a major factor in dampening inflation pressures.
Last month, gasoline prices tumbled 7.4 percent, the largest drop since December 2008, after falling 0.6 percent. That offset a 0.2 percent gain in food prices. Gasoline prices at the pump fell 29 cents in November.
In the 12 months to November overall consumer prices increased 1.8 percent, the smallest increase since August. That compared to October's 2.2 percent rise.
Away from gasoline and food, the cost of apparel fell 0.6 percent after increasing 0.7 percent in October. New motor vehicle prices rose 0.2 percent after slipping 0.1 percent the prior month.
Prices for used cars and trucks fell 0.5 percent, declining for a fifth straight month. Housing costs edged up, with owners' equivalent rent rising 0.2 percent after climbing by a similar margin in October.
In the 12 months to November, core CPI increased 1.9 percent after rising 2.0 percent in October.