U.S. consumer prices fell last month as the cost of gasoline dropped sharply and food prices were flat, the government reported Tuesday. The tame reading is the latest evidence that the weak economy is keeping inflation contained. The Labor Department said its consumer price index (CPI) fell 0.2 percent in March after a 0.7 percent jump the previous month. Gasoline prices fell 4.4 percent last month, reversing part of February's 9.1 percent spike. Excluding the volatile energy and food categories, core CPI rose 0.1 percent. In the past 12 months, core prices rose 1.9 percent. Except for the February increase, consumer prices have declined or been flat in four of the past five months. Over the past year, consumer prices have risen only 1.5 percent, the smallest 12-month increase in the last eight months. The subdued inflation gives the Federal Reserve (Fed) more room to continue pursuing policies to spark faster economic growth. The central bank is keeping a key short-term interest rate at nearly zero percent at least until unemployment falls below 6.5 percent, and it also is buying about $85 billion in Treasury securities and mortgage-backed bonds in an effort to keep longer-term interest rates low and spur more borrowing and spending.
