WASHINGTON (AFP) - American consumers saw prices fall for the third consecutive month in June on the back of lower gasoline costs, the government said Thursday amid concerns over deflation. The Labor Department said its consumer price index, the most closely watched inflation barometer in the United States, dropped 0.1 percent for the month after falling 0.2 percent in May, the largest decline since December 2008. The June dip, only the third in 15 months, was expected by most economists. Much of the decline was due to weaker gasoline prices. Food prices have remained unchanged for the past two months, according to the Labor Department data. On a year-over-year basis, consumer prices were up 1.1pc in June. The core CPI, which excludes volatile food and energy prices and is closely watched by the central bank in considering interest rates, rose 0.2 percent, after a 0.1 percent climb in May. Most economists had expected the core rate at 0.1 percent. While deflationary pressures exist, core prices remain positive, analysts at Briefing.com said in a note to clients. The CPI data are pleasing with respect to inflation expectations and fit with the Feds prevailing view at the moment that exceptionally low levels of the federal funds rate are likely to be warranted for an extended period, they said. The Federal Reserves policy makers considered new measures to keep the faltering US recovery on track at their talks last month, warning jobs and growth will be tougher to regain than expected, according to minutes of the meeting released Wednesday. The central bank, which has kept interest rates at virtually zero percent since the end of 2008, warned growth will slow to 3.0 to 3.5 percent this year, down from the 3.2 to 3.7 predicted just months ago. While outright deflation is yet an unlikely scenario, deflationary risks to the US economy will not entirely recede until job growth shows stronger momentum and the unemployment rate heads decidedly lower, said Arijit Dutta, a senior economist at Moodys Economy.com.