What Inflation? Consumer Prices Fall 0.1%

Fed's rate cut looks good as housing, gas prices hit books
By Kevin Spak,  Newser Staff
Posted Sep 19, 2007 1:05 PM CDT
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(Newser) – Ben Bernanke is likely patting himself on the back right now, Bloomberg reports. US consumer prices fell 0.1% in August, the first decline this year, making Federal Reserve chairman’s rate cut look good, with inflation potentially under control. “Core inflation has now been falling for nearly a year,'' said one analyst. “The Fed's ease yesterday was not a gamble.”

The drop is likely a sign that weaker consumer spending is preventing companies from raising prices. The number is lower than expected, according to a Bloomberg survey, but analysts did correctly predict the 0.2% core price increase. Core prices exclude volatile energy and food prices. Food costs, however, rose 0.3%, meaning lower gasoline costs were the biggest factor.