August’S Cpi Decline First Decrease In 14 Years

Consumer prices fell in August for the first time in 14 years, as the biggest drop in gasoline prices since 1991 offset higher costs for clothes and prescription drugs.

The Labor Department’s Consumer Price Index, the most closely watched inflation gauge, declined by a seasonally adjusted 0.1 percent last month, a better showing than the modest increase many analysts were expecting.

“The bottom line: This is a very positive report for consumers. Inflation is tame, and households should continue to enjoy weak or falling prices for many products from PCs to vehicles,” said Mark Zandi, chief economist at Economy.com, an economic consulting firm.

August’s performance marked the first monthly CPI decline since a 0.4 percent drop in April 1986, the government said. That was caused by a collapse in global oil prices to $13 a barrel in April 1986 from around $31 a barrel just five months earlier, economists said.

On Wall Street, the tame inflation report didn’t inspire investors. Stocks fell on a mix of profit-taking, bargain hunting and general anxiety about corporate profits. The Dow Jones industrial average closed down 160.47 points to 10,927.06.

Economists believe the outlook remains good that inflation will stay low, but the wild card in that scenario is energy prices. Besides a temporary dip in gasoline prices in August, energy costs have been surging, with crude oil prices recently hitting $35 a barrel.