Feb. 20 (Bloomberg) -- Prices paid by U.S. consumers in January may have risen 0.3 percent, led by higher energy costs, a survey of economists showed in advance of today's report from the Labor Department. The increase in the consumer price index, after a 0.2 percent gain in December, would be the biggest since it rose 0.3 percent in September. The core index, which excludes energy and food, may have edged up 0.1 percent for a second straight month, suggesting little inflation. The projections are based on the medians of more than 60 estimates in Bloomberg News surveys. Productivity gains, competition and unused capacity have held down prices and spurred discounting by companies, among them automaker General Motors Corp. and retailer Sears, Roebuck & Co. The 1.1 percent increase in the core index last year was the smallest since 1960.
``Consumer disinflation remains in place,'' Jose Rasco, senior economist at Merrill Lynch & Co. in New York, said in a note to clients. The report is set for release at 8:30 a.m. in Washington. The consumer price index is the government's broadest gauge of costs of goods and services. Almost 60 percent of the index covers services, including medical visits, airline fares and movie tickets.
Greenspan
Federal Reserve Chairman Alan Greenspan said in congressional testimony last week that low inflation means Fed can remain ``patient'' before raising interest rates. Unused productive capacity has helped limit price increases. The proportion of factories, mines and utilities in use reached a two-decade low of 74 percent in June and averaged 74.8 percent last year before edging up to 76.2 percent in January. During the expansion from 1991 to 2001, capacity use averaged 82.2 percent. Clearance sales helped drive spending last month at retailers including Limited Brands, based in Columbus, Ohio, and Sears, of Hoffman Estates, Illinois. Kohl's Corp., which has offered discounts as high as 80 percent at its department stores, said sales increased 0.3 percent, the first gain in four months for the Menomonee Falls, Wisconsin, company. General Motors, the world's largest automaker, increased incentives 2.4 percent from December to an average last month of $4,431 a vehicle, according to CNW Marketing Research Inc.
Crude, Gasoline Prices
Subnormal temperatures last month in parts of the U.S. boosted energy consumption and prices. Also, an explosion at a liquefied natural gas plant halted oil and petroleum product shipments from Skikda, Algeria's second-largest export terminal. Crude oil futures on the New York Mercantile Exchange rose to a 10-month high of $36.20 a barrel Jan. 20. U.S. crude-oil supplies were at a 28-year low last month. Gasoline costs rose to $1.61 a gallon on average last month from $1.52 in December, according to Energy Department statistics. Other categories in which prices may have risen in January include medical care, rent and education, said Bill Sharp, a senior economist at J.P. Morgan Securities in New York.
Some entertainment costs are rising, too. Hughes Electronics Corp.'s DirecTV raised prices by about 4 percent during the fourth quarter, Hughes Chief Executive Chase Carey said on conference call last week. The company expects to boost revenue per subscriber by more than 4 percent this year, he said. The dollar's decline may spur broader price increases in manufactured goods this year, said economists including Bruce Kasman at J.P. Morgan Chase & Co. in New York. The dollar fell almost 8 percent last year against the Federal Reserve's basket of major currencies and those of leading trade partners. It has fallen 13 percent since early 2002. //www.bloomberg.com