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 The Labor Department said on Thursday its Consumer Price Index
increased 0.3 percent after being flat in November. In the 12 months
to December, consumer prices accelerated 1.5 percent after advancing
1.2 percent in November.
The increases were in line with economists' expectations.
Stripping out the volatile energy and food components, the so-called
core CPI rose only 0.1 percent, slowing from a 0.2 percent gain in
November.
That left its increase over the past 12 months at 1.7 percent, where
it has now been for four consecutive months.
The Fed targets 2 percent inflation, although it tracks a gauge that
tends to run a bit below CPI.
The U.S. central bank has started reducing the pace of its monthly
bond purchases, but persistently low inflation is expected to see it
hold interest rates near zero for a long time even if the jobs
market picks up significantly.
Slack in the jobs market, which has seen small gains in wages, is
keeping the lid on inflation. Even as the economy accelerates, wage
growth is expected to lag, meaning inflation will only gradually
increase this year.
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A 3.1 percent increase in gasoline prices was mostly behind the
spike in inflation last month. The increase in gasoline was the
largest since June and followed a 1.6 percent fall in November. Food
prices nudged up 0.1 percent, rising by the same margin for a third
month.
Within the core CPI, apparel prices rose 0.9 percent, also the
largest gain since June. Apparel prices had declined for three
consecutive months.
There were increases in rents. While medical care costs rose 0.3
percent, prices for prescription drugs fell 0.9 percent. Tobacco
prices rose, maintaining the trend seen in wholesale prices.
New motor vehicle prices were flat, while prices for used cars and
trucks fell.
(Reporting by Lucia Mutikani; editing by
Paul Simao)
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