WASHINGTON (AP) – A plunge in gas prices last month lowered consumer prices by the most in six years. But excluding the volatile food and energy costs, prices rose.
The Labor Department said Thursday that the consumer price index fell 0.7 percent in January, the sharpest drop since December 2008. Tumbling prices at the pump drove nearly all of the decline.
Core prices, which exclude food and energy, rose 0.2 percent.
Overall consumer prices have slipped 0.1 percent over the past 12 months. It is the first yearly drop in five years. And over the past year, core prices have risen just 1.6 percent, below the 2 percent level the Federal Reserve considers optimal for a healthy economy.
Excessively low inflation is complicating the Fed’s decision on when to begin raising the short-term interest rate it controls. Most analysts think the Fed will start to raise rates from record lows in June or September.