U.S. consumer prices fell in July as gasoline prices posted their biggest decline in eight months and food prices fell.

The Labor Department said its consumer-price index declined 0.1% last month, reversing part of a 0.3% gain in June.

Falling energy prices accounted for much of the drop. The core index, which excludes volatile food and energy items, rose by a mild 0.1% for second month in a row.

Consumer prices have risen at a seasonally adjusted annual rate of 4.1% so far this year, while the core index is up 1.8% on the year.

Economists had called for a 0.1% gain in the overall index and a 0.2% increase in the core index.

Gasoline prices fell 4.2% in July, the biggest decline since a 5.1% drop in November.


Meanwhile, a dip in mortgage rates boosted home-building activity in July after an unexpectedly weak performance in June. Housing starts surged by a larger-than-expected 8.3% to a seasonally adjusted annual rate of 1.978 million, the Commerce Department said.


In a separate release, the U.S. Federal Reserve said industrial production rose 0.4% in July despite a sharp drop in utilities output. This followed a 0.5% decline in June, revised from the previously reported 0.3% decline. The June dip, the biggest one-month drop in more than a year, followed two months of growth.

July industrial capacity was up to 77.1% from June’s revised level of 76.9%, previously reported as 77.2%. The July utilization rate was down from May’s revised figure of 77.4%, previously reported as 77.6%.

Economists had called for production to rise 0.5% and for capacity use to come in at 77.5%.