Consumer Prices Drop for First Time in a Year
The cost of living in the U.S. unexpectedly dropped in August for the first time in more than a year.
The consumer-price index declined 0.2%, the first decrease since April 2013, the Labor Department reported.
The median forecast of 83 economists surveyed by Bloomberg called for unchanged. Excluding volatile food and fuel, the so-called core measure was unchanged, the first time it failed to increase in almost four years.
Estimates in the Bloomberg News survey ranged from a 0.3% drop to a 0.1% advance.
Another report showed the current-account deficit unexpectedly shrank in the second quarter. The gap, the broadest measure of international trade because it includes income payments and government transfers, narrowed 3.5% to $98.5 billion from a revised $102.1 billion shortfall in the prior period, according to Commerce Department figures. The median forecast of economists in a Bloomberg survey called for the deficit to widen to $113.4 billion.
The narrowing was mainly caused by a smaller shortfall on secondary income, which at $21.4 billion was the least since 2006. The drop reflected payments of fines and penalties to the U.S. government.
The unchanged reading in core consumer prices was the first time they failed to rise since October 2010 and followed a 0.1% rise in July. Economists had forecast a 0.2% advance, according to the survey median.
Overall consumer prices climbed 1.7% in the 12 months ended in August, following a 2% year-over-year gain the prior month. The core measure also rose 1.7% from August 2013 after 1.9% in the prior 12-month period.
Energy costs declined 2.6% in August from a month earlier, the most since March 2013. Gas prices have been falling for almost three months, helping cushion household budgets. The average price of a gallon of regular unleaded gas was $3.38 as of Sept. 15, its lowest level since February, according to AAA, the largest U.S. motoring club.
The report showed food costs increased 0.2% in August after a 0.4% gain the prior month. The core rate was held back by broad-based declines in prices, including airline fares, recreation, household furnishings, clothing and used cars and trucks.
The CPI is the broadest of three price gauges from the Labor Department because it includes all goods and services. About 60% of the index covers prices consumers pay for services from medical visits to airline fares, movie tickets and rents.
