U.S. consumer prices inched up just 0.1 percent in January as energy prices tumbled sharply for the second straight month, according to a report on Wednesday that may help quell recent anxiety on inflation.
Excluding volatile food and energy costs, the Consumer Price Index, a widely used inflation gauge, rose 0.2 percent for a fourth straight month in January, the Labor Department said.
Wall Street economists had expected a 0.2 percent rise in the CPI, both overall and excluding food and energy, but traders had been bracing for the possibility of larger gains after a report on Friday showed a big pickup in core producer prices.
The producer price report had fueled speculation that the Federal Reserve could step-up its so-far “measured” campaign of interest-rate rises to keep inflation in check. The tame consumer price report could allay those concerns.
The consumer-price report showed energy costs dropped 1.1 percent, with fuel oil prices off 5.2 percent, natural gas costs down 3.0 percent and gasoline off 2.1 percent.
However, energy prices have risen sharply over the past year and a renewed climb in crude oil prices, which topped $50 a barrel on Tuesday, threatens further gains.
The department said food costs rose just 0.1 percent, as did prices for housing, recreation and education and communication. Apparel prices rose 0.3 percent, a turnaround from a 0.4 percent December drop, while medical care prices continued their steep ascent with a 0.4 percent increase.
