U.S. Consumer Prices Flat in January for 2nd Month

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Consumer PricesBy CHRISTOPHER S. RUGABER

WASHINGTON (AP) - U.S. consumer prices were flat last month, the latest sign inflation is in check. That could give the Federal Reserve leeway to continue its efforts to stimulate growth.

The consumer price index has risen 1.6 percent in the 12 months ending in January, the Labor Department said Thursday. That's down from a 2.9 percent pace a year ago.

Excluding the volatile food and energy categories, core prices rose 0.3 percent in January, pushed up by higher costs for apparel, air fares and rents. Core prices have risen 1.9 percent in the past year, below the Fed's inflation target.

The Fed is purchasing $85 billion in Treasurys and mortgage bonds each month in an effort to keep interest rates low. Last month, some Fed policymakers expressed concern the purchases could cause inflation.

Low inflation leaves consumers with more money to spend, which benefits the economy.

Inflation slowed dramatically last year. Consumer prices rose only 1.7 percent in 2012, down from 3 percent in 2011.

Food prices rose 1.8 percent last year, compared with 4.7 percent in 2011. Gas prices rose just 1.7 percent. That followed annual gains of nearly 10 percent in 2011 and roughly 14 percent in 2010.

The relief at the pump ended in recent weeks, with prices rising steadily this month. Higher gas prices will likely push up measures of inflation in February, though economists expect overall price increases to stay mild.

Gas prices averaged $3.77 a gallon nationwide on Wednesday, according to AAA. That's up 46 cents from just a month ago.

Tame inflation also makes it easier for the Fed to continue its efforts to accelerate the economy. If the Fed feared that prices were rising too fast, it might have to raise interest rates. The Fed has kept the benchmark interest rate it controls at nearly zero, a record low, for more than four years.

With job gains and economic growth steady but modest, many businesses are reluctant to raise prices for fear of losing customers. That's helped keep inflation mild. Workers also aren't able to demand higher wages when growth is weak. That limits their ability to spend more.

Still, several Fed policymakers suggested last month that the central bank might have to scale back its bond buying to avoid escalating inflation or disrupting bond markets, according to minutes of the Fed's Jan. 29-30 meeting released Wednesday.


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plcz28

Inflation is rampant and no one is reporting this. I was shocked by the new grocery prices I saw this week. There is something drastically wrong in what is being reported about the US economy and what is not. Gold and silver prices going down????
There is something STRANGE going on here and I guess the average "JOE" American is going to find out in the next couple of months what the score is. But I will bet anyone it's really bad news.......

February 21 2013 at 9:10 PM Report abuse rate up rate down Reply
jdykbpl45

Bought gas lately? Grocieries? They are all up due to Obama\'s policies.

February 21 2013 at 4:27 PM Report abuse rate up rate down Reply
2 replies to jdykbpl45's comment
chris1011

Yes, we all know how this works in Bagger land. Gas up, groceries up? It's the fault of Obama's policies. Stock market up, housing up? It's in spite of Obama's failed policies. Am I right?

February 21 2013 at 4:43 PM Report abuse +1 rate up rate down Reply
Big John

So when gas hit $4.50 a gallon and health care insurance doubled from 2001-2006 it was Obama? Your memory is failing if you cannot remember when oil and gas went from $1.25 under Clinton to $4.50 under Bush. REMEMBER

February 21 2013 at 6:31 PM Report abuse -1 rate up rate down Reply
2 replies to Big John's comment
chris1011

Actually we just got our yearly quote from our insurance provider for our company. The rate for this year is lower by 25% from last year, so no, our health insurance has not gone up. However, I do expect gas prices to rise even more as summer approaches. For that reason I purchased a car for commuting that gets over 60mpg. The future belonngs to those who conserve, and that includes oil and gas.

February 21 2013 at 8:36 PM Report abuse rate up rate down
cpo1514

Any woman will tell you that 'things were different under Clinton". Fact is gas prices did lower after the refineries were back on line after the hurricane.

February 22 2013 at 9:50 AM Report abuse rate up rate down
papadb24

Can I assume, the author and his cronies, have not been to a Grocery Lately?

February 21 2013 at 1:54 PM Report abuse +2 rate up rate down Reply
anthdif

Seriously! Excluding the volatile food and energy categories, core prices rose 0.3 percent in January, pushed up by higher costs for apparel, air fares and rents. Core prices have risen 1.9 percent in the past year, below the Fed's inflation target. Yes, food prices only rose 1.8% but this is from an already very high cost and gas, as we all well know, rose 1.7% from a more than double the rate it was a little over four years ago. Stop the nonsense and stop trying to convince people that they have more disposable income. It only works if you don't have to pay the additional added back on 2%, eat or drive yourself to work.

February 21 2013 at 10:39 AM Report abuse +3 rate up rate down Reply
l07hye

Who do they think they are kidding? Everything has risen in price, taxes, gas, food, just to mention a few. As for me and my family we are not buying anything that is not neccessary. Furthermore we do not go anywhere, that our feet won't take us, or we share ride, with neighbors, and co-workers.

February 21 2013 at 9:45 AM Report abuse +3 rate up rate down Reply
flea573

Gas prices rose just 1.7% in January.Thats just a bold face Government Lie.

February 21 2013 at 9:32 AM Report abuse +2 rate up rate down Reply
1 reply to flea573's comment
jdykbpl45

An Obama Lie!

February 21 2013 at 12:38 PM Report abuse +2 rate up rate down Reply