CPI Drops 1.3% in Past Year, Biggest Drop in 59 Years

U.S. consumer prices increased a seasonally adjusted 0.1% in May as falling food prices largely offset higher gasoline prices, the Labor Department reported Wednesday.

It was the first increase in three months in the consumer price index, which tracks inflation at the retail level. The CPI has fallen 1.3% in the past year, the sharpest decline in prices since April 1950.

The Federal Reserve has warned that deflation remains a major risk, with the global recession putting downward pressure on prices. Slack in the nation's economy -- a high unemployment rate and many idle factories and stores -- should keep inflation in check for the next year or two, Fed officials say. (more)