|
NEW YORK (CNN/Money) - Consumer prices rose 3.3 percent last year, the biggest increase in four years, after a slight decline in December, the government said Wednesday.
Energy costs, which jumped 16.6 percent last year, were the main culprit for the rise -- the biggest in the Consumer Price Index, the government's main inflation gauge, since a 3.4 percent rise in 2000, right before the 2001 recession cooled off prices.
The Labor Department said a 1.8 percent retreat in energy prices in December led to a 0.1 percent drop in CPI in December following a 0.2 percent November increase. It was the first fall in CPI since July. Economists surveyed by Briefing.com had forecast an unchanged reading for December.
The so-called core CPI, which excludes often volatile food and energy prices, rose 0.2 percent in the month, matching November's increase as well as economists' forecasts.
For the full year, core CPI posted a 2.2 percent increase, the department said in its report.
Core CPI is closely watched by economists and policy-makers at the Federal Reserve for signs of inflation. Minutes of the December Fed meeting showed members expressed concern about growing risks of a pickup in inflation.
Only three years since 1966 have seen the core CPI rise less than 2.2 percent, and two of those were 2002 and 2003, when a weak labor market helped keep consumer prices in check.
Even with the pace of inflation picking up last year, and some Fed members expressing concern, most analysts expect the Fed will keep raising interest rates in quarter-point increments rather than boosting them more aggressively. The central bank's policy-makers' next meeting is set for Feb. 1-2.
"I think what this does is ratify the Fed's current stance --- moving at a measured pace seems to be the prudent course," said Lehman Brothers economist Drew Matus.
"We're right where they want us to be -- between 2 and 2.5 percent increases in the core CPI. But last year there was more inflation than they were anticipating at the beginning of the year, and the concern you hear being expressed is that they don't want that to happen again," Matus said.
Energy wasn't the only segment to see prices retreat in December -- clothing, transportation, recreation and food and beverage prices also fell.
Fruit and vegetable prices, which jumped in October and November after four major hurricanes hit the Southeast United States, retreated 0.9 percent in December.
The biggest increases were in medical care, up 0.3 percent in the month, and the catch all "other goods and services" category, which showed a 0.5 percent rise.
The overall increase in CPI matched or outpaced wage gains last year. A preliminary Labor Department report earlier this month showed that average hourly earnings of production workers rose 2.7 percent last year, while average weekly earnings rose 3.3 percent.
|
