Consumer Prices Up as Gas, Clothing Costs Rise

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Consumer prices up as gas, clothing costs riseWASHINGTON (AP) - Consumer prices rose modestly in January on higher costs for food, gas, rent and clothing.

But economists downplayed the increase, saying inflation will likely ease in the coming months as prices for raw materials level off.

The consumer price index increased 0.2 percent last month, after a flat reading in December, the Labor Department said Friday.

Excluding volatile food and energy, so-called "core" prices ticked up 0.2 percent. A big reason for the increase was that clothing prices jumped 0.9 percent. Medical care, rent and tobacco prices also increased.

Car prices were unchanged, and airfares fell.

Core inflation over the past 12 months moved up to 2.3 percent - its highest point in more than three years. A steady rise in core prices could limit the Federal Reserve's ability to take steps to boost the economy.

Still, economists said inflation is likely peaking. For example, clothing prices are higher because of spike last year in the cost of cotton. When the impact of the cotton hike fades, clothing costs should level off.

Guy LeBas, fixed income strategist at Janney Montgomery Scott, said the rise in the core reflected a delayed response to those soaring commodity prices.

The report "points to a benign path for inflation for 2012," LeBas said. "Consumer demand is fairly anemic right now ... firms can't raise prices when nobody's buying."

The Fed last month said it plans to hold its benchmark interest rate at a record low near zero until late 2014. If inflation were to rise rapidly, the Fed would come under pressure to increase rates.

A small amount of inflation can be good for the economy. It encourages businesses and consumers to spend and invest money sooner rather than later, before inflation erodes its value.

And modest inflation, combined with recent increases in income, gives consumers more buying power and should add to economic growth.

Retailers are still reluctant to charge more, even as the economy grows at a moderate pace. Many relied on heavy discounting to boost holiday sales last year.

Oil and gas prices have increased again after dropping late last year, though that has been offset somewhat by falling natural gas costs. The average price for a gallon of gas rose to $3.52 on Thursday, up 14 cents from the previous month.

Falling energy and food costs kept wholesale prices in check last month, the Labor Department said Thursday. The producer price index rose 0.1 percent in January, after dropping the same amount the previous month.

Wholesale gas costs rose, but that was more than offset by steep drops in natural gas, home heating oil and electricity prices.

Core wholesale prices jumped 0.4 percent because of higher pharmaceutical, pickup truck and tobacco costs.

The Fed is forecasting that consumer price inflation will remain in check this year. It expects that the inflation gauge it follows will increase by about 1.6 percent in 2012. That's below the Fed's target for inflation of 2 percent.

Fed Chairman Ben Bernanke announced that target, the first ever for the central bank, last month.

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billcarol88

Where are all you libs now when oil prices are on the rise? 5 years ago it was all President Bushes fault and now oil is skyrocketing again not one of you libs are blaming obama. Some how I will bet you are trying to figure out how to blame President Bush again. Sorry to all you sheep, libs, it will not work this time. Blame obama for all that is going on he has been in office long enough to have done something at least but he hasn't.

February 21 2012 at 6:13 PM Report abuse -1 rate up rate down Reply
1 reply to billcarol88's comment
krpracing

um your an idiot. prices sky rocketed cause of Katrina... bush worked and got the prices back down to $1.75 then we put this idiot obummer in office and we are paying out the ass again. get your facts straight you uneducated prick

February 22 2012 at 12:15 PM Report abuse -1 rate up rate down Reply
Dianne

Must be time for the oil bigwigs to get their bonus'....lucky us!

February 21 2012 at 2:22 PM Report abuse +1 rate up rate down Reply
Dianne

Must be time for the oil bigwigs to get their bonus'....luck us!

February 21 2012 at 2:18 PM Report abuse rate up rate down Reply
joseph evelina

Won't be long for he next recession To all political hopefuls don't waste your money campaigning we are all going to Disney World election day Tired of realty of poor politics

February 21 2012 at 9:16 AM Report abuse +2 rate up rate down Reply
knute9

Is it because of a extremely cold winter, or is speculators manipulating the prices again. PS: There should be a law in the futures market.....to buy a futures contract you must have to be able to take possession of the commodity. Presently the futures market can be easily distorted by speculators.

February 20 2012 at 6:49 AM Report abuse rate up rate down Reply
1 reply to knute9's comment
Gumby

you got it all wrong!!!! It is the gas guzzlers that manipulated prices by behaving so wastefully!! The oil traders simply respond to prevent shortages or fuel rations.. do you want rations ?? So , now if you want to see oil prices come down as I do, too... then gas guzzlers got to stop acting like idiots!!

February 20 2012 at 11:55 AM Report abuse -1 rate up rate down Reply
2 replies to Gumby's comment
white41990

Wrong, supply and demand are having little effect on the prices its the low interest rates and value of the U.S. dollar against foreign currency that is giving investors the opportunity to make a quick buck as the dollar is losing value against other currencies (mostly the euro), now if we had regulation like we had 12 years ago that made it illegal to trade futures out of your possession that you physically didn't own for a profit we wouldn't have the speculation you see today that is causing such high prices, sort of like the energy crisis 12 years ago in California before the Enron collapse, when lobbyists got the markets deregulated to allow what you see today with gasoline, price manipulation worldwide traded on an open market weather you own the contract or not you can now legally trade futures for profit and with record low interest rates you are at less of a risk for loss if you know how to trade/speculate the markets.

February 20 2012 at 7:35 PM Report abuse rate up rate down
bggdg

Where did you get the absurd notion that there were regulations 12 years ago that precluded speculators from trading futures without taking physical possession of the commodity?

Could pigs fly 12 years ago too?

February 21 2012 at 2:03 PM Report abuse rate up rate down
Kelli

friend's mom made $12766 the previous week. she has been making cash on the computer and bought a $553000 condo. All she did was get blessed and put into work the information shown on this link http://myurl.in/YjKvI

February 19 2012 at 11:20 PM Report abuse rate up rate down Reply
democracks0

RICH PEOPLE LIKE OBAMA DON'T CARE THAT FOOD AND CLOTHING PRICES ARE GOING UP. ANYWAY THE TAX PAYERS PAY FOR HIS FOOD AND CLOTHES.

February 19 2012 at 11:00 PM Report abuse +1 rate up rate down Reply
1 reply to democracks0's comment
marine1942

Not to worry. Obama is giving you bac some of the taxes you paid in. Not much and even the people who pay no income tax will get money back,
.we will be like Greece and Spain very soon,,,

February 20 2012 at 3:27 PM Report abuse +1 rate up rate down Reply
democracks0

RICH PEOPLE LIKE OBAMA DON'T CARE THAT GAS PRICES ARE GOING UP. ANYWAY THE TAX PAYERS PAY FOR HIS GAS.

February 19 2012 at 10:59 PM Report abuse rate up rate down Reply
beverlyamy1

its bushs fault.

February 19 2012 at 6:38 PM Report abuse -2 rate up rate down Reply
cutlassv8

Offshore and inshore drilling, along with the Keystone Pipeline are needed now.
If we had a president with leadership skills, the energy situation in the US would
be different. Obama needs to be voted out of office this November.

February 19 2012 at 4:32 PM Report abuse rate up rate down Reply