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U.S. consumer prices fell 0.3 percent in November

 
Published Dec. 18, 2014

WASHINGTON — Plunging gasoline costs pulled U.S. consumer prices lower in November, muting inflation across the economy.

The Labor Department said Wednesday that inflation fell a seasonally adjusted 0.3 percent last month, after prices were flat in October. Gas costs plummeted 10.5 percent in November, the steepest decline in nearly six years.

Core inflation, which excludes volatile energy and food prices, rose 0.1 percent in November. For the past 12 months, overall inflation has risen 1.3 percent while core inflation has increased 1.7 percent.

Falling oil prices and a strong dollar, which lowers the price of foreign-made goods, have combined to curb inflation. Prices have barely budged, even though hiring has picked up and the unemployment rate has fallen to 5.8 percent.

The average price of a barrel of oil has dropped to about $56 from a summer high of $107. That reflects less global demand as Japan has tumbled into a recession, Europe staves off a slowdown, China manages an economy with less momentum and Russia copes with its collapsing currency. But U.S. consumers have largely been insulated from these pressures and benefited from less expensive oil.

Average gas prices nationally have dropped to $2.53 a gallon from $2.89 a month ago and $3.23 a year ago. In Florida, the average is $2.557, down from $3.378 a year ago, according to AAA. For the Tampa Bay area, the average is $2.536, compared to $3.346 a year ago. This suggests that inflation remained subdued in December and may remain modest in the coming months.

Cheaper gas frees up income to be spent elsewhere, often helping to support other sectors of the economy.

Consumer prices did rise last month for medical care, airline fares, alcohol, beef, ham and chicken. But they also slipped for clothing, household furnishings and autos.

The benefits of lower gas prices appear to have spilled over to consumer spending at the start of the holiday shopping season. Spending on motor vehicles accelerated 1.7 percent, while purchases at clothiers, online retailers, electronics stores and department stores all expanded.