Consumer Prices Rise Slightly

The December reading shows no signs of inflation

Consumer prices rose 0.1% in December, less than the 0.2% gain expected by the market. Excluding food and energy, prices were also up 0.1%, compared with a consensus of 0.2% for the core rate.

Energy prices fell 0.4%, because the price survey was taken early in the month, before the recent escalation in oil prices. Declines in apparel (-0.5%) and new car prices (-0.4%) offset increases in hospital care (+0.7%).

Overall, there is no sign of inflation. Energy prices will start to rise sharply in the January report. The CPI is up 2.4% from a year earlier; the index is up 1.9% excluding food and energy. The showdown in the core rate is supporting some deflationary fears.

From Standard & Poor's MarketScope