Cheaper gas drives down measure of US consumer prices by most in 3 1/2 years

WASHINGTON – A measure of U.S. consumer prices fell in May by the most since December 2008 as gas costs dropped sharply. Outside food and energy, prices rose modestly.

The Labor Department says the consumer price index dropped 0.3 per cent. Gas prices plunged 6.8 per cent, also the most since December 2008. Food costs were unchanged.

So-called “core” prices, which exclude volatile food and energy categories, rose 0.2 per cent for the third straight month.

In the past 12 months, consumer prices have risen 1.7 per cent, much less than the pace for the 12 months that ended in April. Core prices have risen 2.3 per cent in the past year, the same as for the 12 months ending in March and April.

Mild price increases leave consumers with more money to spend, which boosts growth.