WASHINGTON Jan 16 U.S. consumer prices were flat in
December, pointing to muted inflation pressures that should help
give the Federal Reserve room to prop up the economy by staying
on its ultra-easy monetary policy path.
The Labor Department said on Wednesday its Consumer Price
Index was unchanged last month, held back by a drop in gasoline
prices. The reading was in line with analysts' expectations in a
Last month, the Fed said it would keep interest rates near
zero at least until the jobless rate falls to 6.5 percent, as
long as the central bank believes inflation will stay below 2.5
Wednesday's data will likely reinforce the view that
inflation will not hit the Fed's threshold anytime soon.
To boost growth and get Americans back to work in the wake
of the Great Recession, the Fed has kept interest rates near
zero since late 2008 and has bought some $2.5 trillion in
Some economists think steady improvement in the labor market
could at least lead the Fed to curtail its asset-buying program
by the end of this year.
The Fed does not use CPI to target inflation, and instead
uses an index released by the Commerce Department. The two
indexes usually track one another quite closely.
By either measure, annual inflation remains below the Fed's
2 percent target.
In the 12 months to December the CPI increased 1.7 percent,
the smallest increase since August. That compared to November's
1.8 percent rise.
A measure of underlying inflation, which strips out volatile
food and energy prices, edged up 0.1 percent in December,
slightly less than expected.
Gasoline prices fell 2.3 percent, marking the third straight
Away from gasoline and food, the cost of apparel fell 0.1
percent. New motor vehicle prices were flat.
Prices for used cars and trucks fell 0.4 percent, declining
for a sixth straight month. Housing costs edged up, with owners'
equivalent rent of primary residences rising 0.1 percent.
In the 12 months to December, core CPI increased 1.9 percent
after rising 1.9 percent in November.