Consumer Prices Fall on Lower Energy Costs

Washington, DC, Sept. 16, 2008--U.S. consumer prices declined 0.1% in August, the first decrease in nearly two years,  on falling energy prices, the Labor Department reported Tuesday.

Energy prices dropped 3.1 percent after seasonal adjustments, the largest decline since October 2006. Gasoline prices fell 4.2 percent. Fuel oil prices dropped 9.6 percent, the most in five years.

The figures were as forecast by economists.

The CPI had risen 1.1 percent  in June and 0.8 percent  in July as energy prices surged.

With the decline in August, the CPI has risen 5.4 percent  in the past year, after rising 5.6 percent  in the 12 months ending in July. The core rate has risen 2.5 percent, a little faster than the Federal Reserve would prefer.

Energy prices remain volatile. In response to Hurricane Ike, gasoline prices shot up 19 cents a gallon last week, a 5 percent  increase. Once supplies return to normal, prices should retreat, reflecting falling crude oil prices.

The CPI report showed inflation was still hot in several sectors but has cooled in others.