Consumer prices fell in August after months of rampant inflation, which in turn benefited retail exchange traded funds (ETFs).

The Consumer Price Index fell 0.1% from last month, preceded by two months of increases: 0.8% in July and 1.1% in June.

But economists are cautioning that prices are still much higher than they were at this time a year ago, reports Catherine Rampell for the New York Times. Year-over-year, prices were up 5.4%. The one-month decline in the index might also not be enough to give lasting relief to consumers.

Breaking down the index, energy prices fell 3.1%, and transportation costs fell 1.5%. Stripping out energy and food prices, the core inflation rate was 0.2%.

Energy prices are continuing their descent, based mostly on lower demand: oil is trading below $93 a barrel, reports Stevenson Jacobs for the Associated Press. Gas prices are edging higher after Hurricane Ike shut down refineries in the Gulf of Mexico. The national average is $3.854.

Ordinarily, this report is considered a major market mover, but analysts think that the report is going to be overshadowed by worries about the nation’s financial institutions. As a result, many retail ETFs are reacting much either way.

But Gary Gordon for ETF Expert notes that despite the broader U.S. market having taken a beating this year, the retail ETFs have been anywhere from flat on the year, to down by just single digits. In fact, some of these funds are at or near their 200-day moving averages:

  • SPDR S&P Retail (XRT): down 2.7% year-to-date; 0.4% below trendline
  • iShares Dow Jones U.S. Consumer Goods (IYK): down 5.3% year-to-date; 1% above trendline
  • Vanguard Consumer Staples (VDC): down 0.6% year-to-date; 2.5% above trendline
  • Retail HOLDRs (RTH): up 3.5% year-to-date; 2.5% above trendline

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.