By the OGJ Online Staff
HOUSTON, Aug. 16, 2001 — Led by plunging energy prices, US consumer prices experienced the biggest decline in 15 years in July, the US Labor Department reported Thursday.
The Consumer Price Index (CPI), the government’s main inflation indicator, fell 0.3% in July, its first decline since April 2000 and the biggest since April 1986. A 5.6% month-to-month decline in energy prices, the biggest since April 1986, accounted for much of July’s decline in inflation. Other government reports suggested it’s possible energy prices have done most of their unwinding for the year and could flatten or turn back up.
The Labor Department reported gasoline prices slipped 11% in July, also the biggest one-month drop since April 1986. Nationwide, average pump prices have been falling since they peaked May 18 at $1.76/gal.
However, the US Energy Information Administration in a separate weekly survey found gasoline and diesel fuel prices ticked up Monday for the first time in several months. Jonathan Cogan, an EIA spokesman, reported the price of gasoline averaged $1.392/gal., compared to $1.376/gal. the previous week.
Likewise, the average price of retail diesel fuel rose to $1.367/gal. from $1.345/gal. the previous week.
“The steady decline we have seen since May may have ended,” Cogan said. “This is the first reversal we have seen in quite awhile. “But we can’t predict a reversal in a trend we have been seeing based on 1 week’s survey,” he said.
Meanwhile, the Labor Department reported natural gas prices fell 4.1% in July, after posting a record 5.6% decline in June. Home heating oil was down 2.8%
Electricity prices were up just 0.3% in July, after soaring a record 3.8% in June. Compared to the same period a year ago, electricity prices were up 9% in July.
Excluding volatile food and energy prices, the “core” CPI rose 0.2%, about in line with analysts’ expectations, after increasing 0.3% in June. During the first 7 months of 2001, the energy index, which registered double-digit increases throughout 1999 and 2000, declined at a 0.7% seasonally adjusted rate, the Labor Department reported.
Coming just prior to a Federal Reserve Board meeting Tuesday, analysts said the CPI numbers suggested inflation remains tamed, and could leave room for possible further cuts in interest rate targets.
Separately, the Federal Reserve Wednesday reported manufacturing activity was flat in July, the first time in 10 months of no decline, raising hope problems in the industrial sector, a big consumer of natural gas, could be easing.