The drop in energy prices, which is also the largest since April 1986, accounted for much of the good inflation news for July. That came on top of a 0.9% decline in energy prices in June.
Gasoline prices plummeted 11% in July, while Natural gas prices, which posted a record decline in June, fell 4.1% in July. Home-heating oil went down 2.8%.
The Labor Department also cited a fall in clothing and computer costs to the drop in the CPI. Retailers have cut prices to clear out unsold seasonal merchandise.