US consumer prices were flat in July versus June as expected, but fell over the past 12 months by the most since 1950.
The US Labor Department said its Consumer Price Index was unchanged after rising 0.7% in June, in line with market forecasts for a flat reading.
Petrol prices fell 0.8% after jumping 17.3% the previous month, helping to keep overall prices contained.
The food index declined 0.3%, the biggest fall since May 2002, after being flat in June, while prices for apparel and new vehicles rose in July.
Compared to the same period last year, consumer prices fell 2.1%, the largest decline since January 1950.
Stripping out volatile energy and food prices, the closely watched core measure of consumer inflation rose 0.1% in July after increasing 0.2% in June. That was also in line with market expectations for a 0.1% gain.
Compared to July last year, the core inflation rate rose 1.5%, the slowest advance since February 2004, after increasing 1.7% in June.
US output up 0.5% in July
Meanwhile, according to other data, US industrial production jumped 0.5% in July.
The Federal Reserve report noted that 'aside from a hurricane-related rebound in October 2008, the gain in July marked the first monthly increase since December 2007.'
Manufacturing output advanced 1% in July, with much of the increase due to a jump in the auto sector – which built cars at an annual rate of 5.9 million units in the month, compared with 4.1 million units in June.
Excluding motor vehicles and parts, manufacturing production edged up 0.2%.
The output of utilities fell 2.4%t, reflecting unseasonably mild temperatures in July, and the output of mines increased 0.8%.
Despite the rise, total industrial production was 13.1% below its level of a year earlier.
Capacity utilization, a measure of slack in the factory sector, edged up 0.4% in July to 68.5%, a level 12.4% below its 1972-2008 average, the Federal Reserve said.
