December CPI Flat; Core Rate Rises 0.1%

WASHINGTON — The December CPI came in exactly as private economists predicted, indicating that inflation fizzled at year-end.

December CPI was flat (actually down 0.0199% unrounded) and core rose 0.1% (a 0.096% gain unrounded) for over the year rates of a 1.7% rise overall and a 1.9% increase in the core rate.

Food had a third monthly gain at 0.2% as fruit and vegetable prices surged 0.6% but proteins were unchanged. Cereals, dairy and nonalcoholic beverages all rose 0.2%.

Energy prices fell 1.2% on a 2.3% drop in gasoline (a 4.2% decline before adjustment) and as natural gas offset at a 1.3% increase.

In core, tobacco's 0.5% gain and airfares at a 1.2% jump were outsized, and medical care was up 0.3% on surging dental and hospital fees, but they were offset. Used cars posted a 0.4% loss in a sixth drop and new car prices were unchanged (up 0.3% unadjusted). Apparel prices fell 0.1% across ages, and recreation fell 0.2% (video rentals dropped).

Owners' equivalent rent was 0.1% higher.

Overall the CPI was as expected and the yearly inflation rates remain below 2%, suggesting no price pressures. For the year 2012, core decelerated slightly from a 2.2% rise in 2011. This reflected deceleration in apparel, new vehicles, and medical care — all indicating that the 2013 price outlook remains modest.

Market News International is a real-time global news service for fixed-income and foreign exchange market professionals. See www.marketnews.com.

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