U.S. consumer prices recorded their biggest drop in nearly six years in November as gasoline prices tumbled, but that did not change views the Federal Reserve would start raising interest rates in mid-2015.
The Labor Department said on Wednesday its Consumer Price Index (CPI) fell 0.3 percent, the largest decline since December 2008, after being flat in October.
For the 12 months through November, the CPI increased 1.3 percent, the smallest gain since February, after advancing 1.7 percent in October.
Economists who expected the CPI to dip only 0.1 percent from October said Fed officials were likely to shrug off the disinflationary trend as transitory when they issue a statement at the end of a two-day meeting later Wednesday.
“Beside a brief mention about keeping an eye on oil prices, do not expect this inflation report to materially impact today’s Fed decision,” said Jay Morelock, an economist at FTN Financial in New York.
While inflation is running below the U.S. central bank’s target of 2 percent, job growth has shifted into higher gear and the pace of slack absorption in the economy has accelerated in recent months.