Consumer Prices Fall in December

Washington, DC, Jan. 16, 2009--A record plunge in gasoline prices pushed overall consumer prices down for the third straight month in December, closing out a year in which the change in inflation was the smallest in more than a half-century.

The Labor Department said Friday that consumer prices dropped by 0.7 percent in December, slightly smaller than the 0.9 percent drop economists expected.

For the year, consumer prices edged up by just 0.1 percent, the smallest annual change since consumer prices actually fell by 0.7 percent in 1954. Consumer prices rose by 4.1 percent for all of 2007.

The big improvement over 2007 occurred because of the sizable declines in energy prices in recent months.

Excluding volatile food and energy prices, so-called core inflation was unchanged in December. For the year, it was up a moderate 1.8 percent, compared with a 2.4 percent increase for all of 2007.

For December, gasoline prices fell by 17.2 percent, the largest monthly decline on records that go back 71 years.

Overall energy prices also were down by a record amount, falling by 8.3 percent as home heating oil and natural gas also showed declines.