US consumer prices unexpectedly fell in August as petrol prices resumed their decline and a strong dollar curbed the cost of other goods.
Today's figures pointed to tame inflation that complicates the Federal Reserve's decision whether to hike interest rates.
The Labor Department said its consumer price index slipped 0.1% last month, the first decline since January, after edging up 0.1% in July.
In the 12 months to August, the CPI rose 0.2% after a similar gain in July.
Signs of a disinflationary trend reasserting itself are in stark contrast with a rapidly tightening labour market and highlight the dilemma Fed faces as its contemplates raising interest rates for the first time in nearly a decade.
The Fed's policy-setting committee will start a two-day meeting today. While solid data on consumer spending, housing and employment have been supportive of a rate hike, the case for higher borrowing costs has been undermined by recent global financial markets turmoil.
Tightening labour market conditions, marked by record high job openings and a 5.1% unemployment rate, have so far not spurred faster wage growth.
Sluggish wage gains and a strong dollar have contributed to keeping inflation below the Fed's 2% target.
Economists polled by Reuters had forecast the CPI unchanged in August and rising 0.2% from a year ago.
The so-called core CPI, which strips out food and energy costs, moved up 0.1% last month after a similar rise in July. The muted gains in the core CPI reflect the dollar's impact on the cost of imported goods.
In the 12 months to August, the core CPI increased 1.8%. It was the fifth time in six months that the 12-month change was 1.8 percent.
The Fed tracks the personal consumption expenditures price index, excluding food and energy, which is running well below the core CPI.
Last month, US petrol prices fell 4.1%, the biggest drop since January, after rising 0.9% in July. Food prices gained 0.2% as egg prices increased 7.7%.
Egg prices are now up 35.3% from a year ago, reflecting the impact of the avian flu that struck some parts of the country early in the year.
Meanwhile, the rental index increased 0.3% last month, matching a similar gain in July. There were also increases in tobacco prices and apparel.
But airline fares fell 3.1% and used car prices declined for the fourth month in a row. Household furnishings also fell as did the cost of recreation.