By Jeffry Bartash, MarketWatch
WASHINGTON (MarketWatch) - The prices that U.S. consumers paid for goods and services fell slightly in June, mainly because of lower gasoline costs, the government reported Friday.
The main consumer-price index dropped a seasonally adjusted 0.1%, the third straight monthly decline, according to Labor Department data.
The more closely followed core rate, seen as a better gauge of inflationary trends, rose 0.2% but still remains at a very low level. The core rate excludes volatile food and energy prices.
Economists surveyed by MarketWatch had predicted a flat reading in overall consumer prices and a 0.1% increase in the core rate. See our complete economic calendar and consensus forecast.
Over the past 12 months, consumer prices have increased 1.1%. The core rate has risen a scant 0.9% during that span. Read the full report on the Bureau of Labor Statistics website.
Since inflation remains low and the economy is still frail, the Federal Reserve has tried to stimulate growth by keeping short-term interest rates near zero. The potential for rising prices is seen as minimal.
"Policy makers continued to anticipate that both overall and core inflation would remain subdued through 2012," according to a Fed report released earlier this week.
The central bank's main concern is slack U.S. growth, but the Fed has few options left to address the problem. Most companies are not hiring and they continue to hoard cash, offsetting the effects of low interest rates. Consumers have also cut back on spending, reducing demand for goods and services.
Report details
The biggest decrease in consumer prices in June occurred in energy, mostly gasoline for autos as well as electricity. Energy prices fell 2.9% for the second month in a row.
The gas index retreated for a fifth month after nine consecutive increases. And electricity prices saw the sharpest one-month drop since October 1986.
In the past year, however, energy prices are still up 3%.
Food prices were unchanged in June. Prices fell for fruits and vegetables, but they rose for meats, poultry, fish and eggs.
Aside from energy and food, prices rose in most other areas of the economy. The government showed higher prices in shelter, clothes, medical care and recreation, among other things.
Shelter prices, which account for nearly a third of the CPI's market basket, edged up 0.1% in June. Rents also rose 0.1%, as did ownership-equivalent rent. It was the first increase in that category in almost a year.
Prices for clothes rose 0.8% in June, medical care climbed 0.3% and recreation costs ticked up 0.1%.
Airline fares fell 0.6%.
In a separate report, the Labor Department said real, or inflation-adjusted, weekly earnings fell 0.2% in June. Real weekly earnings have risen 1.5% over the past 12 months, the Labor Department said.
Real hourly earnings rose 0.1% in June and are up 0.6% in the past year.
