Consumer Prices in U.S. Decline by Most in Six Years on Fuel

17 Dec 2014 | Author: | No comments yet »

Consumer prices post biggest drop in six years.

WASHINGTON (MarketWatch) — The sharp slide in gasoline prices gave another boost to U.S. households in November, as consumer prices fell by the biggest amount in six years and inflation-adjusted take-home pay rose just as the holiday season kicked into high gear. The consumer-price index, which measures what Americans pay for everything from rent to haircuts, fell a seasonally adjusted 0.3% from October, the Labor Department said Wednesday. Global oil prices have been in a freefall since the end of summer, lowering the cost of gas to less than $2 a gallon in some parts of the country from as high as $3.70 in mid-June. The Fed is set to conclude its latest policy meeting Wednesday, and officials are closely monitoring inflation as they plot when to raise short-term interest rates.

Real hourly wages are up just 0.8% in the past 12 months, however, so Americans will have to see further gains to encourage them to spend more and boost the overall economy. The Fed’s preferred inflation measure, the Commerce Department’s price index for personal consumption expenditures, showed overall prices up 1.4% in October from a year earlier and core prices up 1.6%.

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