CPI Falls for First Time in Eight Months

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he Labor Department said Tuesday that consumer prices fell 0.1% in July, the first decline in eight months.

The decrease, led by lower prices for gasoline, clothing and food, followed a 0.3% increase in June. The "core" rate, which excludes food and energy, rose 0.1% for a second straight month.

The consumer price index is a closely monitored indicator of inflation. Economists expected the index to rise 0.2%, Bloomberg reported.

The tamer-than-expected readings were likely to be warmly received on Wall Street since they implied the Federal Reserve does not have to be in a big rush to push interest rates up to head off inflation, Reuters reported.

Energy prices fell 1.9% in July, the first decline since November, Labor said. Food prices, which account for about a fifth of the index, rose 0.3%.

The CPI was up 3% from July of last year. Excluding food and energy, it rose 1.8% from July 2003.

So far this year, consumer prices are rising at a 4.1% annual rate, compared with a 2.1% increase at the same time a year ago.