Consumer prices slipped 0.1 percent last month, pulled down by sharply lower gas prices and cheaper air fares, used cars, and mobile phone plans.
The Labor Department said the consumer price index rose just 1.9 percent in December from a year earlier, the first time it has fallen below 2 percent since August 2017.
Excluding the volatile energy and food categories, core prices rose 0.2 percent for the third month in a row. They rose 2.2 percent from a year ago for the second straight month.
The figures suggest that the healthy economy is not yet creating widespread inflation pressures. That gives the Federal Reserve more leeway in deciding whether to raise interest rates. Fed Chair Jerome Powell has said the Fed can be “patient” regarding rate hikes this year.