Consumer prices rise 2.6%

By Blake Ellis, staff reporter


NEW YORK (CNNMoney.com) -- Consumer prices rose from a year ago amid climbing gasoline prices but the pace of price increases slowed, the government said Friday.

The Consumer Price Index, the government's key inflation reading, rose 2.6% during the past 12 months, according to a report from the Labor Department. In December, prices rose 2.7% from the previous year.

The core CPI, which is more closely watched by economists because it strips out volatile food and energy prices, rose 1.6% over the past year. That's the lowest level since September, when prices rose at a rate of 1.5%.

January: For the month of January, overall prices rose 0.2%. Economists surveyed by Briefing.com had forecast a 0.3% rise.

In a surprise drop, the core CPI fell 0.1% in the month, the largest decline since December 1982. Analysts had expected a 0.1% increase.

The drop came amid falling prices of housing and shelter, which fell 0.5%. The index for lodging away from home fell the most -- 2.1%, while rent prices were unchanged.

The drop in overall core CPI for January was a bit of a fluke because of the volatile lodging prices, said Mark Vitner, an economist at Wells Fargo Securities.

"We're probably seeing a lag response of businesses cutting back on meetings and traveling, and that's weighing on the core CPI," he said. "So the number is a little exaggerated -- we're not going to get declines like this month over month."

Prices of new vehicles and airline fares dropped as well, while medical care prices rose the most since January 2008 and the index for used cars and trucks climbed higher for the sixth-consecutive month.

Overall consumer prices were boosted by rising energy prices. Gasoline prices rose 4.4%, pushing the energy index up 2.8% in January, the ninth-consecutive month of increase.

Fuel oil and natural gas prices rose as well, while electricity prices fell. Higher prices of dairy products and fruits and vegetables boosted the food index up 0.2% in January.

Despite the overall rise in consumer prices, Vitner said inflation is unlikely to become a problem this year as housing costs fall, vehicle prices level off and airline fares drop.

"But that doesn't mean [inflation] won't become a problem in the future," said Vitner. "While I expect continued good news in 2010, some of the factors restraining inflation this year will likely swing the other way in 2011."  To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 16,982.59 22.02 0.13%
Nasdaq 4,444.91 -4.65 -0.10%
S&P 500 1,978.91 0.57 0.03%
Treasuries 2.49 0.02 0.89%
Data as of 7:44am ET
Company Price Change % Change
Apple Inc 99.02 1.35 1.38%
Facebook Inc 74.92 -0.27 -0.36%
Bank of America Corp... 15.50 -0.09 -0.58%
Dollar Tree Inc 54.87 -0.08 -0.15%
Family Dollar Stores... 75.74 15.08 24.86%
Data as of Jul 28

Sections

New annual report from U.S. government shows the long-term prognosis for Medicare has improved thanks to slower health spending, while the outlook for Social Security remains unchanged. More

Actor-founded This Bar Saves Lives had Hollywood connections, but learned Start-Up 101 the hard way. More

Steve Mason, a pastor from California, inherited more than $100,000 in student loan debt when his 27-year-old daughter died suddenly in 2009. With interest and late penalties, the debt has since ballooned to $200,000. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.