WASHINGTON (AP) — A steep fall in gas costs pushed down a measure of U.S. consumer prices last month, keeping inflation mild.
The seasonally adjusted consumer price index dropped 0.3 percent in November from October, the Labor Department said Friday. Gas prices fell 7.4 percent, the biggest drop in nearly four years. That offset a 0.2 percent rise in food prices.
In the past year, consumer prices have risen 1.8 percent, down from October's 12-month increase of 2.2 percent.
Excluding the volatile food and gas categories, prices ticked up 0.1 percent in November. Core prices have risen 1.9 percent in the past year — below the Federal Reserve's annual target of 2 percent.
Higher rents, airline fares and new cars pushed up core prices last month. The cost of clothing and used cars fell.
"In simplest terms, inflation is not a problem," Jim Baird, chief investment strategist at Plante Moran Financial Advisors, said. Lower inflation "is a real positive that should provide modest relief for households dealing with limited income growth."
High unemployment and slow wage growth have made businesses reluctant to raise prices. Many worry higher prices could drive away customers. That's helped keep inflation tame.
Modest inflation leaves consumers with more money to spend, which can boost economic growth. Lower inflation also makes it easier for the Fed to continue with its efforts to rekindle the economy. If the Fed were worried that prices are rising too fast, it might have to raise interest rates.
Gas prices have fallen sharply in the past two months after spiking in the late summer. A gallon of gas cost an average of $3.29 nationwide Friday. That's 15 cents less than a month ago and 50 cents less than in mid-October.
The increase in food prices was smaller than many economists expected. This summer's drought in the Midwest, which scorched corn and soybean crops, has pushed up food prices. But the increase hasn't been dramatic so far. Food costs have risen 1.8 percent in the past 12 months.