U.S. consumer prices fell in October for the first time in four months as consumers paid less for gasoline, new cars, and computers, though prices outside of energy and food posted a slight increase, the government said Wednesday in a report that shows inflation is easing after prices rose sharply in the spring.
The Labor Department reported that its Consumer Price Index (CPI) fell 0.1 percent last month, led by a sharp 3.1 percent decline in gasoline prices. Food prices rose, but at the slowest pace so far this year.
Excluding volatile energy and food costs, "core" CPI rose 0.1 percent, as higher costs for housing rentals and healthcare more than offset lower costs for new cars, airline fares, and hotels.
In the 12 months ending in October, consumer prices rose 3.5 percent, following a 3.9 percent 12-month rise through September. Core prices rose 2.1 percent in the 12 months through October, up from 2.0 percent in the 12 months through September.
Many economists believe inflation is peaking after climbing steadily this year. Slower inflation could give more momentum to those at the Federal Reserve (Fed) who believe the central bank should do more to try to lower persistently high unemployment.
Rising oil prices sent the average cost of gasoline to nearly $4 a gallon (3.8 liters) in May, while food costs rose sharply because of higher prices for corn and other grains used as animal feed. Higher prices for cotton drove clothing costs up for four consecutive months, and automobile costs rose after the March earthquake in Japan disrupted supply chains and slowed production.
Fed policymakers are forecasting lower inflation next year, which would give the central bank more latitude to keep interest rates at historic lows, and potentially take other steps to stimulate the economy. The Fed said two weeks ago it expects inflation to drop from about 2.8 percent this year to about 1.7 percent in 2012.