Consumer prices excluding food and energy fall

WASHINGTON (AP) — Consumer prices rose less than expected in January while prices excluding food and energy actually fell, something that hasn't happened in more than a quarter-century.

The Labor Department said Friday that consumer prices edged up 0.2 percent in January while prices excluding food and energy slipped 0.1 percent. That was the first monthly decline since December 1982.

The benign inflation news gives the Federal Reserve more time to keep interest rates at record-low levels to shore up the economy and should ease worries in financial markets that a Fed rate hike is more imminent.

The news on consumer prices was better than expected, especially after a government report Thursday showed that wholesale prices shot up 1.4 percent in January.

"After a few reports showing higher inflation trends, we saw proof today that they have yet to trickle down to the consumer level," said Jennifer Lee, senior economist at BMO Capital Markets. "What price pressures did exist all came from the volatile food and energy categories."

The 0.2 percent rise in overall prices reflected a 2.8 percent jump in energy costs, the biggest one-month gain since August. Energy prices were driven up by a 4.4 percent rise in gasoline pump prices and a 3.5 percent increase in the cost of natural gas.