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U.S. Consumer Prices Flat, Point to Tame Inflation
Published in Saudi Press Agency on 16 - 01 - 2013

U.S. consumer prices were flat in December as lower gasoline costs offset more expensive food and higher rents, the government said in a report Wednesday that pointed to tame inflation pressures.
The Labor Department reported that its consumer price index (CPI) was unchanged last month, in line with economist expectations. Food prices increased 0.2 percent, while rents and airline fares also rose. Gasoline prices fell 2.3 percent in their third consecutive monthly decline. Excluding volatile energy and food prices, core CPI rose only 0.1 percent in December.
For all of 2012, consumer inflation slowed, with prices rising only 1.7 percent, down from 3 percent a year earlier. Food prices increased 1.8 percent, down from 4.7 percent in 2011. Energy prices rose slightly. Core prices rose only 1.9 percent for all of 2012, below both the Federal Reserve (Fed) inflation target of 2 percent and the 2011 increase of 2.2 percent.
Mild inflation leaves consumers with more money to spend, which is good for the economy. Lower inflation also makes it easier for the Fed to continue with its efforts to accelerate growth.
Last month, the central bank said it would keep interest rates near zero percent at least until the unemployment rate falls to 6.5 percent, as long as the Fed believes inflation will remain below 2.5 percent. Wednesday's data likely will reinforce the view that inflation will not reach the Fed's threshold anytime soon.
To assist growth and improve hiring following the Great Recession, the central bank has kept interest rates near historic lows since late 2008 and has purchased about $2.5 trillion in assets.


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