Gaso­line prices drive US con­sumer prices lower

The Nation - - WORLD BUSINESS -

FALL­ING fuel prices in De­cem­ber pushed US in­fla­tion to its slow­est pace in more than a year, mask­ing steady gains in food and shel­ter costs.

The new fig­ures con­firm the view of cen­tral bankers that they can hold off on rais­ing in­ter­est rates again any time soon in the ab­sence of in­fla­tion pres­sure.

The Con­sumer Price In­dex, which tracks costs for house­hold goods and ser­vices, fell by 0.1 per cent last month from Novem­ber, when it was un­changed, ac­cord­ing to the Labour Depart­ment. It was the first de­cline since March and matched econ­o­mists’ ex­pec­ta­tions.

For 2018, the in­dex rose a tepid 1.9 per cent, dip­ping below 2 per cent for the first time in 16 months.

The De­cem­ber en­ergy in­dex fell 3.5 per cent, led lower by weak­en­ing gaso­line and fuel oil prices, while food costs rose 0.4 per cent.

Ex­clud­ing the volatile food and fuel cat­e­gories, core CPI rose 0.2 per cent for the month. That also was in line with ex­pec­ta­tions and re­flected higher costs for hous­ing, home fur­nish­ings and med­i­cal care, ac­cord­ing to the monthly re­port.

Core CPI held steady at 2.2 per cent for the year.

After ris­ing steadily in the first part of the year, in­fla­tion has been trend­ing lower since July, con­found­ing ex­pec­ta­tions that steady job growth, fall­ing un­em­ploy­ment would at last drive prices higher.

Fed­eral Re­serve Chair­man Jerome Pow­ell and other Fed of­fi­cials have sig­nalled clearly in re­cent days that they will pause in­ter­est rate in­creases while they eval­u­ate the econ­omy, but see no in­fla­tion threat for now.

But some econ­o­mists are not con­vinced the in­fla­tion dragon has been slayed.

Food costs “look like they could be back on the rise”, econ­o­mist Joel Naroff said, lament­ing an in­crease in cake prices. “The drive to eat health­ier is be­com­ing much more ex­pen­sive as fish and seafood costs are jump­ing.”

In ad­di­tion, he cau­tioned, “The tight labour mar­ket con­tin­ues to push up wages”.

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