Consumer prices fell in December following steep declines in energy prices.
The consumer price index fell by 0.4 percent, adjusting for seasonal variation, the Bureau of Labor Statistics reported Friday, the biggest monthly drop since 2008.
Overall, annual inflation was at just 0.8 percent in December, down sharply from 1.3 percent the month before. Inflation ran as high as 2.1 percent during the summer.
Slowing inflation in December was led by the falling price of gas, which was down 9.4 percent for the month and nearly a quarter since June. Energy prices altogether fell 4.7 percent month-to-month.
Stripping out energy and food prices, core inflation was slightly down to 1.6 percent on an annual basis, lower than 1.7 percent in November.
The Federal Reserve targets inflation at 2 percent annually. With energy prices driving inflation to well below that level and falling, Fed officials are likely to debate whether a longer timeline for raising interest rates is warranted. Chairwoman Janet Yellen and others have suggested that they see the impact of energy price declines on inflation as temporary, and that the improving economy and accelerating job creation will push prices up in the medium term.
The 0.8 percent rise in prices for 2014 was the second smallest in 50 years, according to the BLS, trailing only 2008, when the country entered the recession.
Airline prices fell 5 percent in December, and were down 4.7 percent on the year.
