Drop in gas prices lowered inflation in June

WASHINGTON (AP) — Consumer prices fell last month for the first time in a year because of a steep drop in gas costs. But Americans paid more for autos, clothes and hotel stays, driving prices outside of volatile food and energy costs up.

The Consumer Price Index fell 0.2 percent in June, the Labor Department said today. Gas prices fell 6.8 percent, the steepest decline in two and a half years.

After excluding volatile food and gas costs, core prices rose 0.3 percent. That was the second straight monthly gain and the largest back-to-back increase since the summer of 2008.

Many of the trends driving the increase in the core index are expected to fade by next year. New car prices rose 0.6 in June, after jumping 1.1 percent in May. Those increases reflect supply shortages stemming from Japan's earthquake, which should ease in the fall.