Instant View: Consumer prices fall in November

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.

COMMENTS:

CARY LEAHEY, ECONOMIST, DECISION ECONOMICS, NEW YORK

"A slightly larger than expected decline in energy prices contributed to a slightly larger drop in the overall CPI increase. The modest increase of the price index excluding food and energy - just a tenth of a percentage point -- is probably not welcome at this juncture. We'd like to see a pickup in core inflation in reaction to a stronger economy. A sagging inflation rate right now is not a good thing."

OMER ESINER, CHIEF MARKET ANALYST, COMMONWEALTH FOREIGN EXCHANGE, WASHINGTON

"The inflation data continues to be benign and there is very little in the way of price pressures in the economy. That therefore justifies the Federal Reserve's action to keep a very accommodative monetary policy."

JOSEPH TREVISANI, CHIEF MARKET STRATEGIST, WORLDWIDE MARKETS, WOODCLIFF LAKE, NEW JERSEY

"Inflation is tame but the more successful the Fed's economic support policies are, and the more they restore business and consumer confidence the greater the possibility that prices and excessive liquidity resume their historical relationship."

MARKET REACTION:

BONDS: U.S. bond prices remained steady at slightly higher level STOCKS: Stocks briefly turned negative FOREX: The dollar held losses against the yen

(Americas Economics and Markets Desk; +1-646 223-6300)