MW: CPI rises 0.3% in January as energy prices tick higher
With energy prices tumbling 20%, U.S. consumer prices were unchanged over the past 12 months, the lowest inflation rate since 1955, the Labor Department reported Friday.
In January, the consumer price index rose 0.3% seasonally adjusted as expected, the government said, as energy prices rose 1.7%, the first increase since July.
The core CPI - which strips out food and energy prices to get a better handle on underlying inflation trends - rose 0.2% seasonally adjusted in January compared with the 0.1% gain expected by economists surveyed by MarketWatch.
Over the past 12 months, the core CPI is up 1.7%, the lowest inflation since mid-2004.
Most economists believe the annual CPI rate will go negative in February even if energy prices continue to inch higher. The global recession is forcing producers to slash prices in the face of falling demand for many commodities.
Some economists are beginning to worry about deflation - a general decline in prices and wages. Even the Federal Reserve has signaled that deflation is now a greater immediate threat than inflation, although Fed policymakers recognize the risks of inflation bubbling up again in a few years if they do not slow down the growth of money supply.
With prices rising 0.3% for urban workers and average hourly earnings also up 0.3%, real (inflation-adjusted) weekly earnings fell 0.1% in January. Real weekly earnings are up 3.4% in the past year. Over that time, 3.6 million jobs have been lost, many of them in low-paying occupations such as temp-help and retail.
Details of the CPI
In January, housing prices were unchanged, with large declines in hotel rates and household fuel bills offsetting modest increases in rent and homeownership costs. Housing cost, which represent 43% of the CPI, have fallen over the past six months and are up 2.2% in the past year.
Food prices rose 0.1% in January. Prices of food purchased to consume at home fell 0.1%. Food prices are up 5.3% in the past year.
Energy prices rose 1.7%, including a 6% increase in gasoline prices. Natural gas and fuel oil prices fell. Energy prices are down 20.4% in the past year.
Apparel prices rose 0.3% and are down 0.9% in the past year.
Transportation prices rose 1.3% on higher gasoline prices. New car prices rose 0.3%, while air fares fell 2.1%.
Medical care prices rose 0.4%, the biggest gain in a year.
Tobacco prices rose 0.8%
