Consumer prices continued to rise at a tepid pace in December, inching up 0.1% on the month, which followed a 0.4% increase in November. The data indicates that the soft economic recovery is keeping a lid on price pressures. The core-CPI which strips out the effects of energy and food prices, was up 0.1% as well after a flat reading in November. Compared to December 2008, prices were 2.7% higher, but that was skewed due to a steep fall in energy prices at the end of ‘08. Overall today’s report shows inflation soft enough that the Fed can continue to try and support the recovery by keeping short-term interest rates near zero. The Fed has signaled that as long as core inflation and inflation expectations remain low and unemployment stays high, the fed funds rate won’t be raised from a record low.
Fundamental Updates
Consumer Prices Rise a Tepid 0.1% in DecemberFundamental Updates \ \ 8:47 AM EST \ January 15th, 2010 |
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