According to the monthly Labor Department report, consumer prices in the world’s largest economy fell by 0.1% in October.  The drop compares to estimates of an unchanged month and reverses a 0.3% gain in September.

Annually, the pace of consumer prices slowed, rising by 3.5% compared to a quicker 3.9% pace back in the previous month.  Currently, the rate of inflation is at the top end of the central bank’s 2-3% target range.  Core prices, however, remained a bit higher.  In October, prices excluding more volatile food and energy prices rose by 2.1%, compared to a 2% pace back in at the beginning of the third quarter.

Leading the drop in the overall headline number were declines in energy and fuel expenses.  In the month, gasoline prices at the pump fell by 4.4% while overall energy costs declined by 2% – with raw gasoline prices moving lower by 3%.  Surprisingly, food prices rose the least amount of this year – rising by 0.1%.

The smaller than anticipated rise in consumer prices may give Federal Reserve officials more leeway in implementing another round of monetary easing – without an exacerbation of rising inflationary pressures.