Sliding energy costs push down consumer prices

The price of U.S. goods and services is falling, led by a sharp decline in oil and gas prices.

The Labor Department's Consumer Price Index decreased 0.3 percent in November, the biggest drop in the closely watched inflation gauge since December 2008. Forecasters were expecting a 0.1 percent dip in prices.

"If you're looking for signs of inflation, you will have to look elsewhere," said Jennifer Lee, senior economist with BMO Capital Markets, in a note.

Energy prices fell for a fifth straight month, with gas prices retreating 6.6 percent in November after sinking a total of more than 8 percent over the previous four months.

The average national price for a gallon of unleaded gas is $2.50, according to AAA, down from 3.22 a year ago.

Food prices rose 0.2 percent in November. So-called core prices, which exclude volatile food and energy items, rose 0.1 percent.

Core inflation over the past 12 months has fallen from 1.8 percent to 1.7 percent.

Inflation remains below the Federal Reserve's 2 percent target. Stuart Hoffman, chief economist with PNC Financial Services Group, said that is complicating the central bank's decision about when to start raising interest rates. With sliding energy costs weighing on prices, it will take stronger wage growth to lift inflation to meet the Fed's target.

The Federal Open Market Committee, which sets interest rate policy for the Fed, is offering its latest readout on the economy this afternoon. Most economists think the central bank will start raising rates sometime next year, although hikes are expected to be gradual to ensure monetary tightening doesn't slow U.S. economic growth.