By Harriet Torry and Sharon Nunn 

WASHINGTON--U.S. consumer prices declined in December and wages rose, a sign low gasoline prices and stronger earnings are putting more money in Americans' pockets.

The consumer-price index, which measures what Americans pay for everything from medical supplies to toys, fell a seasonally adjusted 0.1% in December after posting no change in November, the Labor Department said Friday.

Excluding the volatile food and energy categories, so-called core prices rose 0.2%, the same rate of change as in November and October. Both readings were in line with economists' expectations.

In the 12 months through December, overall prices rose 1.9%, the smallest year-over-year change since August 2017 and a sign low gasoline prices are holding down inflation.

Core prices were up 2.2% on the year, the Labor Department said, the same year-over-year change as in November. Both year-over-year readings were in line with economists' expectations.

Meanwhile wage growth was strong in December as U.S. unemployment remained low, pushing up the cost of labor. After adjusting for inflation, average hourly earnings rose a seasonally adjusted 0.5% in December from November. That was the strongest month-over-month change since January 2015. Average hourly earnings are up 1.1% from December 2017.

Friday's report showed an index of energy prices fell 3.5% in December, led by a seasonally adjusted 7.5% decline in gasoline costs. The price index for food rose 0.4%. Used vehicle prices declined 0.2% in December after rising more than 2% in each of the prior two months.

Gas prices for U.S. drivers were $2.37 a gallon on average in December, down 28 cents or nearly 11% from $2.65 in November, according to the U.S. Energy Information Administration. Retail gasoline prices have dropped from a nearly four-year high of $2.90 a gallon in May.

Alongside low gas prices, a strong dollar is likely keeping a lid on the prices of goods, many of which are either purchased overseas or compete with imports.

Rising interest rates and faster economic growth in the U.S. compared with other developed economies have helped push the dollar higher over the past year. The WSJ Dollar Index, which measures the greenback against a basket of other currencies, rose about 4% from December 2017 to December 2018.

Friday's data come a week after the Labor Department's December employment report, which showed average hourly earnings for private-sector workers rose 3.2% on the year in December, their biggest full-year gain of the expansion. The unemployment rate rose slightly last month, to 3.9%, but it remains at a very low level historically.

Federal Reserve officials signaled they are unlikely to raise interest rates for at least a few months while they assess the impact of recent market volatility on the U.S. economy, according to minutes of their Dec. 18-19 meeting.

The minutes, released Wednesday, indicated officials were already growing more cautious about their policy path when they agreed to raise rates last month, and thought they could be close to ending their recent series of rate increases. Many cited muted inflation pressures as a reason the central bank could afford to take a wait-and-see stance.

Fed Chairman Jerome Powell on Thursday described inflation as "low and under control," in remarks in Washington, D.C.

That gives central bankers "the ability to be patient and watch patiently and carefully as we see the economy evolve," he said.

(END) Dow Jones Newswires

January 11, 2019 08:45 ET (13:45 GMT)