WASHINGTON (MarketWatch) — Another sharp decline in the cost of gasoline pushed consumer prices lower in April for the second straight month and inflationary pressure dropped to the lowest rate since late 2010, the U.S. government reported Thursday.

The consumer price index fell by a seasonally adjusted 0.4%, as sharply lower energy costs offset a small increase in food prices, the Labor Department said. Economists polled by MarketWatch had forecast a 0.3% decline in April.

The inflation rate over the past 12 months fell to 1.1% in April from 1.5% in March, marking the lowest level since November 2010.

The low level of inflation gives the Federal Reserve more room to pursue its strategy of buying huge amounts of mortgage and government debt to keep interest rates low. The constraint on prices also gives consumers some relief after a spike in gasoline costs earlier this year ate into their disposable income.

In April, real or inflation-adjusted wages rose 0.5% to mark the biggest gain in five months.

Yet weekly earnings were flat last month because the number of hours worked slumped 0.6%, an ominous sign if the trend continues.

The subdued pace of inflation was evident in most major categories of consumer goods, particularly gasoline. Gas costs fell 8.1% after a 4.4% drop in March. That contributed to a 4.3% decline in energy prices in April.

Food prices, another major category of consumer expenditures, edged up 0.2% in April after being unchanged in March.

The cost of cereals, baked goods, seafood and eggs rose, while prices of fruits and vegetables fell.

The cost of housing rose for the fourth straight month — more evidence of rising rents and home prices — and the price of vehicles advanced for the fourth month in a row.

Yet medical costs were flat in April and failed to rise for the first time since July 2010, another sign of downward pressure on health-care costs.

Excluding food and energy, core consumer prices rose 0.1%. That was slightly less than Wall Street expectations.

The core rate is viewed by the Fed as a more useful gauge of underlying inflationary trends. Over the past 12 months the core rate of inflation has risen a scant 1.7% — the lowest level in almost two years — and there’s little evidence of inflationary pressure in the pipeline.

Some economists even worry inflation could turn into a deflation — an arguably more deadly threat to an economy. Deflationary episodes, though rare, tend to be associated with long periods of weak growth.

“While many continue to fear that the Fed’s aggressive monetary policy will generate inflation, in the near-term, deflationary pressure remains the greater concern,” said Jim Baird, chief investment office at Plante Moran Financial Advisors.

The Fed typically aims to keep inflation around 2%, but the central bank has said it’s willing to let prices rise somewhat faster than that if it helps to reduce the nation’s 7.5% unemployment rate to 6.5% or less. Instead inflation has been falling.

In separate reports Thursday, the government said jobless claims jumped 32,000 to 360,000 to mark a six-week high, while manufacturers in the Philadelphia region said business conditions worsened in May. Construction on new homes also sank in April.

In U.S. markets, stocks fell after the negative reports on housing, jobless claims and manufacturing.