Consumer price index drops 0.2% in June as energy costs ease By Jeffry Bartash, MarketWatch WASHINGTON (MarketWatch) — The cost of living for Americans fell last month for the first time in a year, mainly because of a drop in gasoline prices, the Labor Department reported Friday. The consumer price index fell a seasonally adjusted 0.2% in June. Energy costs sank 4.4% — the largest decline since December 2008 — as the price of gas and household electricity decreased. Gas prices fell 6.8% and electricity declined 1.6%, the biggest drop in 14 years. The cost of food rose 0.2%, though it was the smallest monthly increase in 2011. Consumer inflation has climbed an unadjusted 3.6% over the past year, largely because of the surging cost of gas and many other commodities. The 12-month increase in consumer inflation was as low as 1.1% as recently as November. The so-called core rate of inflation, which excludes food and energy, climbed a higher than expected 0.3%. Wall Street and the Federal Reserve pay more attention to the core CPI because it gives a better picture of underlying inflationary trends. Economists surveyed by MarketWatch expected the overall CPI to fall 0.2% in June, with a 0.2% increase in the core rate. Even with oil prices easing, economists say core inflation could continue to rise over the next few months because of spillover effects. The prior spike in oil prices has added to the costs of a wide range of goods and services. The core rate has climbed 1.6% over the past year, the highest 12-month increase since January 2010. In a related report, Labor said the average inflation-adjusted wages of U.S. workers rose 0.2% in June on an hourly basis, almost entirely because of the drop in consumer prices. Average hourly wages were flat. Jeffry Bartash is a reporter for MarketWatch in Washington.

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