--US consumer prices -0.3% in July; core rate +0.2%
--US consumer prices decline in July biggest since April 1986
--Ex-energy, US July consumer prices +0.3%; energy -5.6%
--US energy price decline in July biggest since April 1986
--US July CPI gasoline prices -11.0%; fuel oil -2.8%
--US July tobacco +4.8; food prices +0.3%; new autos unchanged
--US July consumer shelter prices +0.1%; apparel -0.6%
--US July CPI +2.7% from year ago; core CPI +2.7%
--US real average weekly earnings in July +0.6%

Neil Stempleman // Washington, Aug. 16 (BridgeNews) - Plunging energy prices, along with stable shelter costs and slightly lower airline fares, caused U.S. consumer prices to fall a seasonally adjusted 0.3% in July, the biggest decline in over 15 years and the first decline since April 2000, the Labor Department said Thursday. Excluding volatile food and energy costs, "core" consumer prices rose 0.2%.

Analysts had expected overall CPI to be unchanged and the core CPI to gain 0.2% after they rose 0.2% and 0.3% respectively in June.
Coming shortly after data showed producer prices fell 0.9% and import prices excluding fuel were down 1.0%, Wednesday's report will hearten those who believe inflation is not a threat to the world's largest economy. The Federal Reserve, which has already cut short-term interest rates by 2.75 percentage points since the start of the year, is scheduled to hold a policy meeting next week. Most analysts expect the Fed to cut rates again by a 0.25 percentage point.
During the last 12 months, the CPI and the core rate have both rise 2.7% For all of 2000, the CPI climbed 3.4% while the core rose 2.6%. Economists and the Federal Reserve often strip out volatile food and energy costs to get a better reading on the underlying inflation rate.

LEADING THE WAY
Energy prices fell 5.6% in July, the biggest decline since April 1986, led by a 11.0% plunge in gasoline costs. In addition, fuel oil prices fell 2.1%, and natural gas fell 4.1%. Electricity costs rose 0.6%.
Stable prices were recorded across a broad array of categories. Airline fares fell 0.2%, apparel prices fell 0.6%, shelter prices rose only 0.1%, and new vehicle prices were unchanged.