The consumer price index rose 0.3% in December, the Labor Department said Wednesday, down from November's 0.8% increase. The core CPI, which excludes volatile food and energy prices, advanced 0.2%. The data largely matched Wall Street forecasts.
Unrounded, the CPI rose 0.283% last month. The core CPI advanced 0.242% unrounded.
Consumer prices jumped 4.1% in 2007, the biggest calendar-year increase since 1990. The core CPI grew a more modest 2.4% last year. While a slight deceleration from 2006, the year-to-year core rate rose three-straight months at the close of 2007 from a low of 2.1% in September.
That confirms Fed Chairman Ben Bernanke's warning last week that higher oil prices are "probably putting some upward pressure on core inflation measures as well." Still, Mr. Bernanke's remarks strongly suggested that weak growth is his biggest concern, not higher inflation. Indeed, he pledged to make "substantive" rate reductions if needed to support the economy, which Wall Street took as code for a half-point rate cut at the Fed's Jan. 29-30 meeting.
A surprising decline in retail sales last month signaled that while the economy likely grew at a modest 1% to 2% last quarter, it started 2008 on a very weak trajectory, fanning fears of an outright contraction this quarter or next.
Meanwhile, annual growth in core consumer inflation -- though rising -- is not too far above the top end of the Fed's presumed comfort zone of around 1.5% to 2%. The Fed's preferred gauge, the core price index for personal consumption expenditures, is also slightly above that range at 2.2% annual growth through November.
Energy prices last month increased 0.9% compared to November, according to Wednesday's report. Gasoline prices advanced 1.1%, and electricity prices fell 0.2%. Food and beverage prices were unchanged following several solid monthly gains.
Medical-care prices, meanwhile, increased 0.3%, while clothing prices were up a modest 0.2% after jumping 0.8% the previous month. Transportation prices increased 0.5% on the month, and airline prices jumped 1.6% reflecting the secondary effects of higher energy prices. New vehicle prices were unchanged.
Housing, which accounts for 40% of the CPI index, was up 0.3%. Rent increased by 0.4%. Owners' equivalent rent rose 0.3%. Lodging away from home rose 0.2%.
In a separate report, the Labor Department said the average weekly earnings of U.S. workers, adjusted for inflation, rose 0.1% in December. Average hourly earnings increased 0.4%, and average weekly hours were unchanged.
For 2007 as a whole, real weekly earnings fell 0.9%, indicating that worker paychecks didn't keep pace with inflation.
Industrial Production Is Unchanged
U.S. industrial production flattened during December, as manufacturing of housing sector goods and cars tumbled. Industrial production was unchanged last month, following an unrevised 0.3% rise in November, the Federal Reserve said Wednesday in a monthly report.
Capacity utilization of U.S. industries fell to 81.4% from 81.6% in November. November usage was originally seen at 81.5%. The 1972-2006 average was 81.0%. The median estimates of economists surveyed by Dow Jones Newswires had industrial production down 0.2% in December and capacity use at 81.2%.
Over the past 12 months ending in December, industrial production grew 1.5%. Manufacturing production was unchanged compared with November. Production had increased 0.3% in November. Capacity utilization in that sector went down 0.1 percentage point to 79.7%.
Production of manufactured durable goods was unchanged. Nondurable goods manufacturing was 0.1% lower. Manufacturing of motor vehicles and parts fell 0.5% last month compared with November. It increased 1.2% the month prior and tumbled 1.6% during October. Excluding motor vehicles and parts, industrial production would have been unchanged.
Machinery production increased 0.2% in December after dropping 0.6% in November. Business equipment increased 0.8%. Output rose 0.7% in November.
Production of construction supplies decreased 0.9%. Furniture fell 1.2%. Electrical equipment and appliances dipped 0.1%. Output at the nation's technology firms, however, increased 0.8%. Computers rose 1.1%.
Mining output increased 0.1% in December and mining capacity usage was 92.1%, unchanged from November. Utilities output decreased 0.2% in December and capacity usage was 86.2%, down from 86.5% in November.
U.S. consumer prices soared at their fastest rate in almost two decades last year as higher energy, food and medical bills took a toll on consumers, suggesting that the economy faces a stagflationary mix of slower economic growth and rising price pressures.
Underlying prices that strip out food and energy prices crept higher at the end of the year as well, suggesting some second-round effects from higher energy and food prices.
Still, the inflation data aren't alarming enough to prevent the Federal Reserve from carrying out a fourth-straight interest rate reduction later this month amid signs that the housing slump has spread to the broader economy.
No comments:
Post a Comment