NEW YORK (CNN/Money) - A key measure of U.S. consumer prices rose modestly in December, the government said Thursday, while the number of Americans filing new claims for unemployment benefits fell more than expected.
The Labor Department said its Consumer Price Index (CPI), the government's main inflation gauge, rose 0.1 percent in December after rising 0.1 percent in November. Stripping out volatile food and energy costs, the core CPI rose 0.1 percent after rising 0.2 percent in November.
Economists, on average, expected CPI to rise 0.2 percent and core CPI to rise 0.1 percent, according to Briefing.com.
Separately, the Labor Department said the number of Americans filing new claims for unemployment benefits fell to 360,000 in the week ended Jan. 11 from a revised 392,000 the prior week. Economists, on average, expected 395,000 new claims, according to Briefing.com.
The reports helped lift U.S. stock market futures, which pointed to a positive opening on Wall Street. Treasury bond prices fell.
Recent reports of falling producer prices have helped fuel worries of deflation, an unstoppable drop in prices that makes life easier for consumers -- at first -- but miserable for businesses, who can't raise prices to keep up with the natural increase in the wages they pay.
In order to keep costs in line, businesses cut jobs, which shrinks demand, which makes prices fall again. It's a vicious cycle, one that has bedeviled Japan, the world's second-largest economy, for years.
Federal Reserve Chairman Alan Greenspan and many other economists have said they doubt the U.S. economy, the world's largest, is at risk of deflation.
According to the Labor Department report, the CPI rose 2.4 percent in the 12 months ended in December. Excluding food and energy prices, the widely watched index rose 1.9 percent.
Between 1992 and 2000, during a long economic boom, the CPI, on average, gained about 2.6 percent every year. That figure dropped to 1.5 percent in 2001, during a recession.
In other words, by at least one measure, consumer inflation returned to a somewhat normal pace in 2002.
Few doubt, however, that businesses lack real pricing power, which is forcing them to keep their costs in check and discouraging them from hiring more workers.