- Associated Press - Wednesday, December 15, 2010

WASHINGTON (AP) — Consumer prices increased slightly last month as food and energy costs ticked up, but there was little sign of widespread inflation.

The Consumer Price Index rose 0.1 percent in November, less than the previous month’s increase of 0.2 percent, the Labor Department said Wednesday. In the past year, prices have moved up only 1.1 percent.

The report shows that the sluggish economy is keeping prices in check. Outside of the food and energy costs, core consumer prices rose 0.1 percent, the first increase in four months.

Several reports Tuesday showed that the economy is gaining strength, with retail sales rising and business executives increasingly optimistic. But with unemployment near double digits and workers receiving only modest wage gains, retailers and other companies are reluctant to raise prices for fear of losing customers.

“Christmas came early for shoppers, with many retailers slashing prices to spur demand,” Sal Guatieri, an economist at BMO Capital Markets.

In the past year, the core index moved up 0.8 percent, above October’s 0.6 percent annual increase, which was the lowest since the index began in 1957.

Prices have stabilized since the summer, when the CPI dropped for three straight months. That decrease raised fears of deflation, a prolonged and debilitating drop in prices; wages; and the value of stocks, homes and other assets. But since then, the index has increased for five straight months.

Food prices rose 0.2 percent last month because of higher costs for meats, eggs and fish.

Gas prices rose 0.7 percent, driving energy costs up 0.2 percent, the fifth straight rise. Still, it was the smallest increase in five months.

Tame prices make it more likely the Federal Reserve will complete the program it announced last month to purchase $600 billion in government bonds, economists said. That effort is intended to boost the economy by lowering long-term interest rates, though so far rates haven’t responded, moving up instead.

The central bank likes to see prices rise at a pace closer to 2 percent annually to keep deflation from taking hold.

After meeting on Tuesday, Fed policymakers said that “measures of underlying inflation have continued to trend downward” and are below levels consistent with the central bank’s goal of stable prices.


Copyright © 2018 The Washington Times, LLC.

The Washington Times Comment Policy

The Washington Times is switching its third-party commenting system from Disqus to Spot.IM. You will need to either create an account with Spot.im or if you wish to use your Disqus account look under the Conversation for the link "Have a Disqus Account?". Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide