Cheaper gasoline helps keep consumer prices flat in June

Consumer prices in the U.S. flattened out in June as declining energy costs offset an increase in the price of meat, vegetables and other food, the Labor Department reported Tuesday.

The flat inflation reading helped put a little more money in the pockets of U.S. workers. Food prices rose 0.2%, but the cost of energy dropped 1.4% as electricity bills and prices at the pump eased.

Excluding food and gasoline, the core consumer price index rose 0.2% in June.

The core CPI is used by the Federal Reserve to help determine whether to raise or lower a key interest rate that affects the cost of loans to consumers and businesses. The core rate has risen a modest 2.2% over the last 12 months — down from 2.3% in May — giving the Fed little cause to fear inflation.

The CPI figures matched Wall Street expectations. Economists surveyed by MarketWatch expected no change in overall prices and a 0.2% increase in the core rate.

Gasoline prices fell again in June, though not as much as in May. The gasoline index dropped 2% after a 6.8% decline the previous month. Also, electricity costs fell 0.5%. Natural-gas prices climbed 1.7%, however.

At the grocery store, prices rose 1.3% for fruit and vegetables; 0.2% for meat, poultry, fish and eggs; and 0.1% for soft drinks. The cost of dairy, cereal and baked goods fell slightly.

Lower inflation gives the Fed more room to adopt additional measures to boost the U.S. economy. Consumer prices have eased considerably as a spike in energy costs earlier in the year unwinds.

Bartash writes for MarketWatch.com/McClatchy.