US consumer prices fall in December

GMT 14:45 2016 Wednesday ,20 January

Arab Today, arab today US consumer prices fall in December

A fall in US consumer prices has led to a sharp decline in the price of meats
Washington - AFP

US consumer prices fell in December, pulled lower by a continuing drop in energy prices, while underlying inflation hovered just above the Federal Reserve's target, official data showed Wednesday.

The Labor Department reported its consumer price index fell 0.1 percent in December after being unchanged in November. Analysts expected the CPI would also come in unchanged in December.

Energy prices tumbled 2.4 percent last month, reflecting the fall in crude prices and relatively mild winter weather that has curbed demand for heating oil. Fuel oil prices plunged 7.8 percent and gasoline dropped 3.9 percent.

Food prices dipped 0.2 percent, led by a sharp decline in meats, poultry, fish and eggs.

Stripping out volatile food and energy prices, core CPI edged up 0.1 percent, the smallest gain since August. A broad rise in prices for shelter, medical care and other areas was partly offset in declines for apparel, airfares and new vehicles.

Year-over-year, consumer inflation was up 0.7 percent in December, slightly below the 2014 gain of 0.8 percent and the smallest annual rise since the 2008 financial crisis. 

But underlying inflation was tracking close to the Federal Reserve's 2.0 percent target. Core CPI increased 2.1 percent from a year ago, after a 1.6 percent rise in 2014.

Saying it expected inflation to head toward its target, in December the Fed decided to raise interest rates for the first time in more than nine years. 

The central bank's preferred inflation measure was up 0.4 percent year-on-year in November, and core inflation, stripping out energy and food, increased 1.3 percent.

"The unexpected decline in consumer prices in December could make some Federal Reserve officials less willing to hike interest rates in March," said Ryan Sweet of Moody's Analytics.

"Things could change between now and then, but for the Fed to raise rates, inflation will have to accelerate."

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