U.S. consumer prices dropped two-tenths of a percent in June, largely because of a decline in the cost of oil.

Friday's report from the Labor Department says outside the volatile areas of energy and food, prices in the overall economy rose a modest 1.6 percent over the past year.

A separate report says U.S. consumers grew much more pessimistic during early July. Data from the University of Michigan show rising unemployment is one reason for the growing gloom among consumers.

Economists watch for clues about consumer spending, which drives most U.S. economic activity.