Consumer prices in the U.S. came in essentially unchanged for the second consecutive month in January, the Labor Department revealed in a report released on Thursday.
The Labor Department said its consumer price index was unchanged in January after coming in flat in December, while economists had expected the index to inch up by 0.1 percent.
While energy prices tumbled by 1.7 percent amid a 3.0 drop in gasoline prices, the sharp decrease was offset by higher core consumer prices.
The core consumer price index, which excludes food and energy prices, rose by 0.3 percent in January following a 0.1 percent increase in December. Core prices had been expected to rise by 0.2 percent.
The increase in core prices reflected a 0.8 percent increase in apparel prices as well as higher prices for transportation services, shelter, and used cars and trucks.
While core prices rose at their fastest rate in well over a year, Paul Dales, Senior U.S. Economist at Capital Economics, said he doubts that such gains will become commonplace.
The report also showed that the headline consumer price index increased at an annual rate of 1.6 percent in January, reflecting a slowdown from the 1.7 percent annual growth seen in December.
The Labor Department noted that the annual rate of consumer price growth has been slowing since its recent peak of 2.2 percent in October.
Core consumer prices saw a 1.9 percent year-over-year increase in January, the same rate of growth seen in the two previous months.
Rob Carnell, chief international economist at ING, said, "If the Fed were bothered about inflation, then a figure of close to, but below 2.0%, would be about the perfect outcome on the core number."
"Today's figures give the doves more room to keep pushing current QE policies," he added. "And disruption to activity in the event of public spending sequestration could give the doves a further fillip."
The Labor Department released a separate report on Thursday showing a modest increase in producer prices in January, with an increase in food prices offsetting a drop in energy prices.
The Labor Department said its producer price index rose by 0.2 percent in January after falling by 0.3 percent in December. Economists had expected prices to increase by about 0.3 percent.
Excluding food and energy prices, the core producer price index still edged up by 0.2 percent in January following a 0.1 percent increase in the previous month. The increase matched economist estimates.
by RTT Staff Writer
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