Posted: Tuesday, August 19th 2014 at 1:52pm
Consumer prices edge up 0.1 percent in July
By The Associated Press
WASHINGTON (AP) -- U.S. consumer prices rose in July at the slowest pace in five months, held back by a drop in gasoline prices.
Consumer prices edged up a seasonally adjusted 0.1 percent last month, after larger gains of 0.3 percent in June and 0.4 percent in May, the Labor Department reported Tuesday. It was the smallest increase since a similar 0.1 percent rise in February.
The July price restraint came from falling gasoline prices, which had surged in June. All energy prices were down 0.3 percent and this helped offset a 0.4 percent rise in food costs, which have been pushed up by adverse weather including a drought in California.
Over the past 12 months, consumer inflation is up 2 percent while inflation excluding food and energy is up 1.9 percent. Price gains around 2 percent are considered moderate and meet the 2 percent inflation target set by the Federal Reserve.
Analysts believe overall prices will moderate further in coming months, helped by moderation in energy costs. AAA reports that the nationwide average for a gallon of regular gasoline dipped to $3.45 on Monday, down 13 cents in the past month.
Gas prices are also lower than a year ago, when a gallon of regular cost $3.54. That fall in gasoline prices is one reason for the optimism of economists that consumer spending will show solid gains in coming months. A drop in gasoline prices means consumers will have more to spend on other items.
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