U.S. December consumer prices record largest decline in 6 years

The U.S. consumer prices in December 2014 recorded the largest decline since December 2008 on sharply lower gasoline prices, the Labor Department said Friday.

Consumer Price Index (CPI), a main gauge of inflation, fell 0.4 percent in December on a seasonally adjusted basis, compared to a decrease of 0.3 percent in November.

Over the last 12 months, the index increased 0.8 percent before seasonal adjustment, compared to 1.3 percent increase in November.

Gasoline index plunged 9.4 percent and led to the decrease in the CPI, said the Labor Department. The gasoline index fell for the sixth month in a row in December, while the food index rose 0.3 percent in the month.

Excluding the volatile food and energy categories, the so-called core CPI, was unchanged in December, compared to 0.1 percent increase in November. The core CPI was up 1.6 percent in the past 12 months.

Both the headline CPI and the core number were below the Federal Reserve's inflation target of 2 percent, which will leave room for the Federal Reserve to maintain loose monetary policy.

However, Fed chair Janet Yellen said in December that the impact from falling energy prices will be transitory, and the Fed expected inflation to rise gradually toward 2 percent as the labor market improves further and the transitory effects of lower energy prices and other factors dissipate.

According to some economists, Yellen's remark might suggest the Fed could begin to raise interest rates despite the inflation below its target. Endi