US inflation falls for first time in over a year

(MENAFN- AFP) Consumer prices in the United States fell in August for the first time in more than a year, dragged lower by declines in energy, the Labor Department reported Wednesday.

The consumer price index fell 0.2 percent on the month. It was the first decline in CPI since April 2013, surprising analysts who estimated it would be unchanged from July.

Excluding volatile food and energy prices, core CPI was flat in August.

Food prices edged up 0.2 percent, while energy prices accelerated their march downward, dropping a hefty 2.6 percent, the largest decline since March 2013.

Gasoline prices led the decline, down 4.1 percent. Electricity prices were the only major energy component that increased in August, up a scant 0.1 percent.

Year-over-year overall inflation was up 1.7 percent, easing from 2.0 percent in July.

The data offered fresh evidence of tame inflation, well below the Federal Reserve's longer-term 2.0 percent target.

The weak report came amid a two-day meeting of the Fed's monetary policy-setting Federal Open Market Committee.

"Startlingly weak core CPI looks like a fluke but is a powerful boost to FOMC doves today," said Ian Shepherdson of Pantheon Macroeconomics.

The central bank, in a post-meeting statement, is expected maintain its stance that its key near-zero interest rate will not be raised before mid-2015.

The personal consumption expenditures price index, the Fed's preferred inflation measure, rose 1.6 percent in July from a year ago, while the core PCE index increased 1.5 percent.