Kyle Bean for Fortune
By John Kell
September 17, 2014

U.S. consumer prices unexpectedly declined in August, the first drop since April 2013, due to a drop in energy costs and easing food prices.

The seasonally adjusted consumer price index (CPI) slid 0.2% in August, according to the Labor Department on Wednesday. Economists surveyed by Bloomberg had projected CPI would be unchanged.

The CPI data comes on the same day the Federal Open Market Committee will issue a policy statement and a press conference featuring Fed Chair Janet Yellen. The Fed in late July said inflation has moved “somewhat closer” to the Federal Open Market Committee’s longer-term objective. The Fed is looking for 2% inflation and “maximum employment” before it is expected to move on long-term interest rates. An update on the Fed’s view on inflation is expected later Wednesday.

The energy index’s drop was the largest recorded by the Labor Department since March 2013. The decline in August was due to a broad drop in energy costs, including lower prices for gasoline, fuel oil and utility gas service. Only electricity reported a slight increase in prices in August.

Food prices still slightly increased, but the gains were lower than in July. Meats, poultry, fish and eggs prices increased, as did dairy products, though the indexes for fresh fruits and vegetables dropped.

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