Washington, DC, Jan. 16--Consumer inflation rose only 0.1% in December as the lackluster economy had the effect of holding prices in line, creating a healthier climate for shoppers.
According to the Labor Department, December was the second straight month that the Consumer Price Index, the government's most closely watched inflation gauge, crept up by 0.1%.
The report provided fresh evidence that inflation remains under control and isn't a problem for the economy, which is struggling to get back on sure footing after being knocked over by the 2001 recession.
For consumers, one of the few benefits of a struggling economy is low inflation. Companies, uncertain about demand for their products and services, usually find it difficult to boost prices.
Excluding energy and food prices, which can swing widely from month to month, the core rate of inflation rose by just 0.1% in December, down from a 0.2% rise in November, suggesting that most other prices are holding steady.
The latest reading on inflation was better than the 0.2% rise in the overall CPI that analysts expected. The figures on the core inflation rate matched expectations.
Energy prices fell for the second month in a row, dropping 0.4% in December. Gasoline prices fell 1.4%, though some analysts believed that rising prices later in the month weren't captured by the CPI report.
Prices at the gasoline pump have risen in the past three weeks to an average $1.50 a gallon, according to the Lundberg Survey of 8,000 U.S. service stations. According to the Energy Department, American motorists could pay up to $1.54 per gallon of gasoline this spring even if war is averted in Iraq.
For all of 2002, consumer prices rose by 2.4%, up from the 1.6% increase in 2001.
Most of that pickup came from rising energy costs.
Energy prices rose by 10.7% in 2002, a turnaround from the 13% drop registered in 2001.
Elsewhere in the report, food prices rose by 0.3% in December, up slightly from a 0.2% rise in November.
New car and truck prices dropped by 0.4% in December and clothing prices went down by 0.5%.
