US inflation logged its biggest decline in 15 years in July, as oil prices fell sharply, the US labour department said in a report today.
The consumer price index, the broadest measure of US retail prices, dropped a larger-than-expected 0.3 per cent in July, its first decline since April 2000. But prices outside of the food and energy sectors rose slightly, advancing 0.2 per cent.
As had been widely expected, energy prices were restrained by sharply lower gasoline costs. Prices at the pump fell 11 per cent in July, the biggest one-month drop since April 1986.
The July CPI reading leaves the door open for the Federal Reserve to once again lower interest rates when its policy-setting Federal Open Market Committee meets next Tuesday. The Fed has already cut rates six times by a total of 2.75 percentage points this year in an effort to prop up an shaky US economy.
For the 12 months ended in July, prices rose 2.7 per cent, the smallest annual gain since January 2000.
Within the report, transportation costs fell a hefty 2.3 per cent, reflecting lower gas prices. Clothing prices slipped for a fourth straight month, dipping 0.6 per cent.
The biggest gain in was seen in the catch-all "other goods and services," which rose 1.6 per cent. Education and communication costs were up 0.5 per cent.