Friday, May 29th16.6°C
26426
24291

Higher gas costs drive up US consumer prices 0.3 per cent in December, most in 6 months

WASHINGTON - U.S. consumer prices rose last month by the most since June, driven up by higher gas prices, but excluding energy, inflation was tame.

The Labor Department said Thursday that the consumer price index rose a seasonally adjusted 0.3 per cent in December, after a flat reading the previous month.

Prices increased 1.5 per cent in 2013, down from 1.7 per cent in 2012. That's below the Federal Reserve's target of 2 per cent. Fed officials have said in recent months that they are watching the inflation data closely to ensure it does not fall too far.

"The price data continue to deliver the same message: no signs of inflation pressures in the US economy," said Laura Rosner, an economist at BNP Paribas.

Gas prices jumped 3.1 per cent in December, the biggest gain since June. Food prices ticked up 0.1 per cent, pushed up by higher restaurant costs. Grocery prices were flat, held down by the biggest drop in fruit and vegetable prices in five years.

Excluding the volatile food and energy categories, core prices increased just 0.1 per cent in December. Car prices were flat and airline fares plummeted 4.7 per cent, the most in 14 years. Those declines were offset by a big increase in clothing costs, which followed three months of decreases, and rents also rose.

Core prices increased 1.7 per cent in 2013, down from a 1.9 per cent increase in 2012.

Inflation has been held back in recent years by sluggish growth and high unemployment, which makes it harder for retailers and other businesses to raise prices.

Persistently low inflation has allowed the Federal Reserve to pursue its extraordinary stimulus program. The Fed launched an $85 billion-a-month bond purchase program in September 2012 in an effort to keep interest rates low and spur more borrowing and spending. Fed policymakers cut those purchases to $75 billion this month.

Fed policymakers could continue their purchases for longer if inflation doesn't move closer to their 2 per cent target. Fed officials have said ultra-low inflation poses economic risks. Among other concerns, falling inflation raises inflation-adjusted interest rates, making it harder to pay off debts and potentially discouraging borrowing. The Fed meets again at the end of this month.

Critics of the bond-buying program fear it will spark higher inflation in the future. But the inflation has yet to materialize.

A small amount of inflation can be good for the economy, because it encourages consumers and businesses to spend and invest before prices rise further. But if prices barely rise, consumers have little incentive to spend and may wait to see if goods get even cheaper.

The Canadian Press


Read more Business News

26361


Recent Trending




Today's Market
S&P TSX15014.09-92.89
S&P CDNX692.45+0.29
DJIA18010.68-115.44
Nasdaq5070.03-27.95
S&P 5002107.39-13.40
CDN Dollar0.8029-0.0017
Gold1204.30+1.50
Oil60.86+2.49
Lumber273.40+0.90
Natural Gas2.83+0.01

 
Okanagan Companies
Pacific Safety0.14+0.01
Knighthawk0.010.00
QHR Technologies Inc1.46-0.02
Cantex0.03+0.00
Anavex Life Sciences0.40+0.00
Metalex Ventures0.07-0.01
Russel Metals25.07-0.13
Copper Mountain Mining1.27-0.03
Colorado Resources0.10+0.00
ReliaBrand Inc0.022+0.009
Sunrise Resources Ltd0.04+0.01
Mission Ready Services0.16+0.01
Decisive Dividend Corporation2.28+0.18

 



26407

FEATURED Property
2182741846 Clarance Avenue
5 bedrooms 5 baths
$1,397,000
more details
image2image2image2
Click here to feature your property
Please wait... loading


Yard sale pricing

Photo: Thinkstock.comI have deliberately abridged this household tips article to illustrate pricing strategies. "Tips For Pricing Yard Sale Items” was written by Lynnette Walczak, and publi...


What's a robo-advisor?

Photo: ContributedIt can only be attributable to human error. -Hal, 2001: A Space Odyssey For most of us who are within thinking distance of retirement, the term “robo” conjures up image...


Cash stressed seniors

Photo: Thinkstock.comFor many Canadian homeowners, their house represents the biggest portion of their net worth. Now, increasing numbers of seniors are starting to recognize the hidden value of their...

_



25991

25991


Member of BC Press Council


24697