Decline in Prices Good for Consumers, Not Bad for Economy.

The Philadelphia Inquirer Knight Ridder/Tribune Business News

May 17--Prices declined by a surprisingly large amount last month, enough to cheer consumers but not enough to depress economists who have worried lately about deflation.

The Labor Department's Consumer Price Index, which measures month-to-month price changes for an array of goods and services, fell from March by 0.3 percent. Economic forecasters had expected a 0.1 percent drop.

"For the moment this could be interpreted as a positive development" for consumers, said Mark Zandi, chief economist at Economy.com in West Chester. "But we don't want to see prices weaken further."

Much of the decline was attributed to a 4.6 percent drop in energy prices as the Iraq war ended, including an 8.3 percent drop in gasoline …