Consumer prices fell sharply in December

Consumer prices fell sharply for the second straight month in December amid the continuing plunge in gasoline prices.

The consumer price index declined 0.4% after dropping 0.3% in October, in line with economists' estimates. Over the past 12 months, prices have risen 0.8%%..

Excluding volatile food and energy items, prices were unchanged for just the second time since December 2010. Economists expected a 0.1% increase. Core prices are up 0.8%% the past year.

Gasoline prices fell 9.4% and the tumble in pump prices has held down overall inflation for six straight months.The 4.7% fall in all energy costs was the largest in six years.

Food prices, by contrast, rose 0.3%, their largest increase since September. Costs for dairy were up 0.6%; fruits and vegetables, 0.4%; and meats, poultry, fish and eggs, 0.3%.

Airlines fares fell 5%, and apparel and used car prices each dropped 1.2%.

The Federal Reserve focuses on core prices as it considers when to raise short-term interest rates for the first time since the financial crisis. But Fed Chair Janet Yellen has said that tumbling gas prices are even tempering broader inflation. That's because package delivery services, manufacturers and retailers are benefiting from lower transportation costs, allowing them to reduce retail prices.