Consumer Price Index Fell Slightly In August

Overall consumer prices fell 0.2 percent in August after rising 0.1 percent in July. Analysts projected no change. Excluding food and energy, the CPI was unchanged after gaining only 0.1 percent the month before. Market expectations were for a 0.2 percent increase in August.

Energy dropped a monthly 2.6 percent, following a dip of 0.3 percent in July. Gasoline prices fell a sharp 4.1 percent, following a 0.3 percent decrease in July. Food price inflation decelerated to a 0.2 percent gain after jumping 0.4 percent in July.

The index for all items less food and energy was unchanged in August; this was the first month since October 2010 that the index did not increase. While the shelter index increased and the indexes for new vehicles and for alcoholic beverages also rose, these advances were offset by declines in several indexes, including airline fares, recreation, household furnishings and operations, apparel, and used cars and trucks.

On a seasonally adjusted basis, the headline CPI was up year-ago 1.7 percent in August-down from 2.0 percent in July. Excluding food and energy, the year-ago pace was 1.7 percent also, easing from 1.9 percent in July.

Overall, the latest CPI report suggests modest price pressure. This adds to the odds that Fed rates will not go up in early 2015. But the counter argument is that the consumer sector is showing signs of improvement-notably with retail sales.