US consumer prices slide by most in six years thanks to cheap gas

Consumer prices fell 0.3 percent last month, the largest decline since December 2008, after being flat in October. The fall in consumer prices has been aiding by plunging crude oil prices, which hit a fresh 5-1/2 year low this week on increased shale production in the US and slowing global demand. 

Daniel Kramer/Reuters
A gas price sign is seen at a Phillips 66 station on Westheimer Road in Houston. Thanks to falling gas prices, US consumer prices recorded their biggest drop in six years, the Labor Department said Wednesday, Dec. 17, 2014.

U.S. consumer prices recorded their biggest drop in nearly six years in November as gasoline prices tumbled, but this probably will do little to change views the Federal Reserve will start raising interest rates in mid-2015.

The Labor Department said on Wednesday its Consumer Price Index fell 0.3 percent last month, the largest decline since December 2008, after being flat in October.

In the 12 months through November, the CPI increased 1.3 percent, the smallest gain since February, after advancing 1.7 percent in October.

Wall Street had forecast the CPI slipping only 0.1 percent from October and rising 1.4 percent from a year ago.

Underlying price pressures are also ebbing a bit after showing some signs of creeping up in October.

Stripping out food and energy prices, the so-called core CPI edged up 0.1 percent after rising 0.2 percent in October. In the 12 months through November, the core CPI rose 1.7 percent after increasing 1.8 percent in October.

The Fed targets 2 percent inflation and it tracks an index that is running even lower than the CPI.

Plunging crude oil prices, which hit a fresh 5-1/2 year low this week on increased shale production in the U.S. and slowing global demand, are keeping overall inflation in check for now.

While inflation is trending lower, job growth has shifted into higher gear and the pace of slack absorption in the economy has accelerated in recent months.

That has left many economists to expect the U.S. central bank could signal its intention for a mid-2015 interest rate hike when officials end a two-day meeting later on Wednesday.

Such a signal could come through changes to the Fed's so-called forward guidance on rates and new economic projections.

Low inflation could still urge caution for the Fed, which has kept its short-term interest rate near zero since December 2008.

Gasoline prices fell 6.6 percent, the biggest drop since December 2008, after declining 3.0 percent in October. Gasoline has now declined for five straight months.

Food prices rose 0.2 percent after nudging up 0.1 percent the prior month. Within the core CPI, shelter costs increased 0.3 percent last month after rising 0.2 percent in October.

There were also increases in airline fares, medical care and alcohol prices. New motor vehicle prices, however, fell as did the cost of household furnishings, apparel and used cars and trucks. 

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to

QR Code to US consumer prices slide by most in six years thanks to cheap gas
Read this article in
QR Code to Subscription page
Start your subscription today