US inflation eased as consumer prices remained in check last month, the US government said Thursday in Washington. While Americans paid more for food, housing and transportation, cheaper energy costs offset the increases.
Consumer prices were flat in December for a second straight month following advances of 0.1, 0.3, and 0.4 percent in October, September, and August.
"Similar to last month, the energy index declined in December and offset increases in other indexes. The gasoline index declined for the third month in a row and the household energy index declined as well," the US Labor Department said in its monthly Consumer Price Index (CPI) report which is seen as the government’s key barometer for US inflation. "The food index rose in December, with the index for food at home turning up after declining last month," the bureau added.
Food prices rose quicker than any other government watched items in December. Home food costs jumped 0.3 percent after falling 0.1 percent in November. The overall food index gained 0.2 percent against the previous 0.1 percent, and it is up 4.7 percent over the year.
The game-changer since October has been falling energy prices, led by gasoline. Prices at the pump were down 2.0 percent last month following previous monthly dips of 2.4 and 3.1 percent. Gasoline had surged 2.9 percent as recently as September, and Americans are still paying 9.9 percent more to fill up their cars as compared to one year ago.
Speaking of cars, new vehicle prices have declined for three straight months while used car prices have dipped for four. Clothing prices are also lower by 0.1 percent after two previous monthly increases.
"Inflation pressures are easing, with sharp drops in energy, vehicle and consumer goods prices," said Chris Christopher, senior economist at IHS Global Insight, according to MarketWatch. "During the holiday season many chain store retailers offered heavy discounts in order to get shoppers to open their wallets."
Stripping out the more volatile food and energy items, the so-called core US inflation rate rose 0.1 percent in December after advancing 0.2 percent in November and registering matching increases of 0.1 percent in October and September.
US inflation picked up 3.0 percent in the 12 months ending December after climbing 3.4 percent in November and surging 3.5 and 3.9 percent in each of the year-over-year increases ending October and September. Yet, the annual inflation rate was at 1.5 percent just one year ago.
The core US inflation rate rose 2.2 percent from December 2011 which equaled the margin in November and remains the highest since October 2008 when the rate was 2.5 percent. Prior increases included 2.1 percent for October and 2.0 percent for September. The 12-month core inflation rate is closely watched by the Federal Reserve. The level remains above the Fed’s target range which is not officially stated but often cited from 1.5 to 2.0 percent.
"We already know that gas prices are starting to go back up in January, so I think a lot of analysts are mistakenly looking at the trend in headline inflation and seeing relief there," CNNMoney.com quoted Carl Riccadonna, senior U.S. economist at Deutsche Bank.
The following table provides US Labor Department inflation data ranging from June to December and on a 12-month basis.
December 2011 Consumer Prices – Gains (percent)
|Food at home||0.2||0.6||0.6||0.6||0.1||-0.1||0.3||6.0|
|Food away from home||0.3||0.2||0.4||0.2||0.2||0.3||0.2||2.9|
|Gasoline (all types)||-6.8||4.7||1.9||2.9||-3.1||-2.4||-2.0||9.9|
|Utility (piped) gas service||0.4||-1.2||2.2||0.8||-3.0||-4.4||-0.8||-3.7|
|All items less food, energy||0.3||0.2||0.2||0.1||0.1||0.2||0.1||2.2|
|Comm. less food, energy||0.5||0.3||0.4||-0.2||-0.1||0.1||-0.2||2.2|
|Used cars and trucks||1.6||0.7||0.9||-0.6||-0.6||-0.1||-0.9||4.0|
|Services less energy||0.1||0.2||0.2||0.2||0.2||0.2||0.3||2.3|
The US Labor Department will publish January 2012 Consumer Price Index information on February 17, 2012 at 8:30 AM Eastern Time. Current and historic CPI data is used as the core data for the US Inflation Calculator.