U.S. consumer prices rose by less than expected in the month of January, according to figures released Friday by the Labor Department.
The Labor Department said its consumer price index rose by 0.2 percent in January after coming in unchanged in December. Most economists had forecast a slightly bigger 0.3 percent increase in January.
The price increases were broadly spread across the economy, with "core" prices, which exclude the volatile food and energy sectors, also rising by 0.2 percent in January. The market consensus correctly forecast the 0.2 percent in core prices. Similarly, the price indexes for food and energy both increased by 0.2 percent. Of the increase in food prices, the price of dairy products increased 0.9 percent, while the indexes for meats, poultry, fish and eggs also increased. The increases were partly offset by a 1.3 percent drop in the prices of fruits and vegetables along with decreases in the prices of cereals and bakery products.
The increase in energy prices, the first increase after drops in the three previous months, reflected a 0.9 percent increase in gasoline prices along with a 1.4 percent increase by the fuel oil index.
The natural gas index dropped 2.9 percent, the fourth monthly decline.
The increase in core consumer prices reflected a 0.9 percent increase in apparel prices as well as a 0.2 percent by the shelter index. Prices for recreation, medical care, and tobacco also increased
Meanwhile, the upside was limited by decreases in the prices of used cars and trucks, which fell a full 1 percent, and airline fares, which dropped 0.9 percent.
U.S. average hourly earnings increased 0.2 percent along with the increase in prices, resulting in no change in real average hourly earnings.
The average workweek remained unchanged, resulting in no change in real average weekly earnings.
The report also showed that consumer prices increased by an annual rate of 2.9 percent in January compared to a 3.0 percent in December. Core prices were up 2.3 percent year-over-year.
Paul Ashworth, Chief U.S. Economist at Capital Economics, said, "Overall, headline inflation should still fall below 2.0% within the next few months but, with the recovery gathering steam, money and credit expanding, unit labor costs rising and even wage growth picking up, there is little danger of inflation falling to dangerously low levels again." The Labor Department released a separate report on Thursday showing that its producer price index edged up by 0.1 percent in January, reversing the 0.1 percent drop seen in December. Most economists had predicted a larger increase by the PPI, forecasting a 0.4 percent rebound in prices.