US consumer prices rise 0.2% in Jan, 12-month inflation at 2.9%

17 February 2012 17:43  [Source: ICIS news]

WASHINGTON (ICIS)--US prices at the consumer level rose by 0.2% in January from December, the Labor Department said on Friday, and the 12-month price gain or inflation rate was 2.9%, almost a full point higher than federal policymakers like to see.

The department also noted that while modest, the 0.2% gain in January’s consumer price index (CPI) was enough to offset a 0.2% increase in average hourly earnings for American workers last month.

With that offset, workers’ wages generally were flat from December to January.

In addition, the department’s report on hourly earnings noted that since reaching their most recent peak in October 2010, real average weekly earnings have fallen 0.9%.

The 12-month 2.9% gain in the consumer price index, also known as the inflation rate, may get some attention at the Federal Reserve Board. The Fed, the US central bank, has a policy aimed at keeping the national inflation rate at 2% or slightly less.

To keep consumer price gains from gaining too fast and igniting runaway inflation, the Fed ordinarily would slow down the US economy by raising its key federal funds interest rate.

That federal funds rate has been at an all-time low of 0%-0.25% since December 2008, and the Fed has recently declared that it intends to keep the rate at that level into 2014 in order to spur the thus far modest US recovery.

But if the inflation rate should rise much above 3%, the Fed’s stated policy of keeping interest rates low through this year and next could be in jeopardy.

Within the January data for consumer prices, gasoline costs at the pump showed a fairly large gain of 0.9% or nearly a whole point. That increase ended what had been a three-month run of falling gasoline prices.

For the 12 months ended in January, gasoline prices have gained 9.7%, the department said.

In contrast, consumer prices for natural gas, chiefly for home heating use, fell by 2.9% in January from December.

Natgas prices have been falling for four months, and the 12-month decline was 5.5%, the department said.

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy


By: Joe Kamalick
+1 713 525 2653



AddThis Social Bookmark Button

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly

ICIS news FREE TRIAL
Get access to breaking chemical news as it happens.
ICIS Global Petrochemical Index (IPEX)
ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index