Consumer prices in the U.S. edged slightly lower in the month of December, according to a report released by the Labor Department on Friday, with the modest decrease largely reflecting a steep drop in gasoline prices.
The Labor Department said its consumer price index slipped by 0.1 percent in December after coming in unchanged in November. The slight drop in consumer prices matched economist estimates.
Energy prices showed another significant decrease during the month, plunging by 3.5 percent in December following a 2.2 percent slump in the previous month.
The steep drop in gasoline prices led the way lower, with gas prices plummeting by 7.5 percent in December after tumbling by 4.2 percent in November.
On the other hand, the report said food prices climbed by 0.4 percent in December, the largest increase since May of 2014. Prices for fruits and vegetables surged higher.
Excluding food and energy prices, the core consumer price index rose by 0.2 percent in December, matching the increases seen in the two previous months as well as expectations.
Higher prices for shelter, recreation, medical care, and household furnishings and operations more than offset lower prices for airline fares, used cars and trucks, and motor vehicle insurance.
The report said the annual rate of consume price growth slowed to 1.9 percent in December from 2.2 percent in November, while the annual rate of core consumer price growth was unchanged at 2.2 percent.
"With real economic growth solid and the stock market continuing to rebound, we suspect that it's still too soon to assume that the Fed's tightening cycle is over," said Andrew Hunter, Senior U.S. Economist at Capital Economics.
He added, "But the continued stability of core inflation could give the Fed more room to pause, as officials assess the impact of the slowdown in global growth and tightening in financial conditions on the domestic economy."
Next Tuesday, the Labor Department is scheduled to release a separate report on producer price inflation in the month of December.