Wednesday 20 January 2016

Inflation falls again in December, CPI finds

In World Economy News 20/01/2016

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Consumer prices fell again in December owing mostly to falling costs of food and gasoline.
The consumer price index declined by seasonally adjusted 0.1% last month, the Bureau of Labor Statistics said Wednesday.
For all of 2015 inflation rose just 0.7%, the second slowest rate in 50 years.
The low rate was largely the result of the biggest drop in gasoline prices in more than a decade. The cost of food also tapered off toward the end of the year because of falling prices for agricultural goods.
In December, energy prices dropped 2.4% and food costs retreated 0.2%.
Stripping out food and energy, so-called core prices rose 0.1% in December. The cost of shelter climbed again, reflecting higher prices for homes and rising rent.
Despite the decline consumer prices in December, inflation no longer appears to be receding.
Over the past 12 months the CPI has risen at a 0.7% rate, the highest year-over-year gain since the end of 2014. The annual rate of inflation had briefly turned negative in early 2015.
Most economists also expect inflation to rise at a faster rate in 2016 as oil prices stabilize.
Core consumer prices have climbed at a much faster 2.1% annual rate, marking the biggest 12-month change since 2012. Higher costs of shelter, medical care and other services have driven the increase.
The Federal Reserve wants inflation to rise to the 2% range, though the central bank relies on a different measure known as the PCE index that’s rising at a much slower annual rate.
Meanwhile, real or inflation-adjusted hourly wages increased 0.1% in December. Real wages have risen 1.8% in the past 12 months.

Source: MarketWatch