WASHINGTON (AP) — Consumer prices rose last month as the cost of gas increased by the largest amount since June 2009. But outside of energy costs, there was little sign of widespread inflation.
The Labor Department said Friday the Consumer Price Index rose 0.5% in December, the largest increase in 18 months. About 80% of the increase was due to an 8.5% rise in the gasoline index, also the sharpest increase in 18 months. Food prices ticked up 0.1% in December.
High unemployment and a weak economy are keeping prices in check. Retailers and manufacturers are reluctant, for now, to pass on the rising costs of raw materials to consumers, for fear of scaring them away.
"Although growth appears to be picking up, there is still very little reason to be concerned about rising prices," said Jim Baird, an economist at Plante Moran Financial Advisors.
Last year, the consumer price index rose by only 1.5%, down from 2.7% in 2009.
Excluding the volatile food and energy categories, the so-called core index moved up 0.1% in December for the second straight month. In the past year, the core index rose by only 0.8%.
That's near a record low of 0.6% set earlier in 2010 and the smallest December-to-December increase in the history of the index, which dates to 1958.
Low prices may be encouraging shoppers to spend more. Retail sales rose for a sixth consecutive month in December, the Commerce Department said Friday, helped by big gains in sales of autos and furniture. The increases helped lift sales activity for the year by the largest amount in more than a decade.
The string of increases pushed sales for all of 2010 up by 6.7%, the largest annual increase since 1999.
