U.S. consumer prices were flat in June as the cost of gasoline dropped, offering some possibility for the Federal Reserve (Fed) to ease monetary policy further to help the struggling recovery, government data showed on Tuesday. The core Consumer Price Index (CPI) rose 1.2 percent for a fourth consecutive month, the Labor Department said. Meanwhile, CPI fell 0.3 percent in May, and June's reading was in line with economists' expectations. The data provided the Fed with some room to maneuver as it considers options to aid the economic recovery, which has slowed significantly in recent months. Minutes of the U.S. central bank's June meeting released last week showed the Fed was open to buying more Treasury bonds to stimulate the economy, but the recovery would probably need to weaken further for broad consensus among policymakers. The economy grew at a 1.9 percent annual rate in the first quarter and estimates for the April-June period are converging around a 1.5 percent pace. Overall consumer prices rose 1.7 percent year-on-year in June after increasing by the same margin in May, the department said. Core consumer prices were last month lifted by apparel prices, which rose 0.5 percent, advancing for a fourth consecutive month, the department reported. New motor vehicle prices gained 0.2 percent after increasing by the same margin in May. Prices for used cars and trucks were unchanged after three straight months of strong gains. In the 12 months to June, core CPI increased 2.2 percent after rising 2.3 percent in May, the department said. This measure has rebounded from a record low of 0.6 percent in October and the Fed, which last month expanded its efforts to stimulate the economy, aims for inflation of 2 percent.
