U.S. Consumer Prices Ticked Lower in December
11 Januar 2019 - 3:00PM
Dow Jones News
By Harriet Torry and Sharon Nunn
WASHINGTON--U.S. consumer prices declined in December and wages
rose, a sign low gasoline prices and stronger earnings are putting
more money in Americans' pockets.
The consumer-price index, which measures what Americans pay for
everything from medical supplies to toys, fell a seasonally
adjusted 0.1% in December after posting no change in November, the
Labor Department said Friday.
Excluding the volatile food and energy categories, so-called
core prices rose 0.2%, the same rate of change as in November and
October. Both readings were in line with economists'
expectations.
In the 12 months through December, overall prices rose 1.9%, the
smallest year-over-year change since August 2017 and a sign low
gasoline prices are holding down inflation.
Core prices were up 2.2% on the year, the Labor Department said,
the same year-over-year change as in November. Both year-over-year
readings were in line with economists' expectations.
Meanwhile wage growth was strong in December as U.S.
unemployment remained low, pushing up the cost of labor. After
adjusting for inflation, average hourly earnings rose a seasonally
adjusted 0.5% in December from November. That was the strongest
month-over-month change since January 2015. Average hourly earnings
are up 1.1% from December 2017.
Friday's report showed an index of energy prices fell 3.5% in
December, led by a seasonally adjusted 7.5% decline in gasoline
costs. The price index for food rose 0.4%. Used vehicle prices
declined 0.2% in December after rising more than 2% in each of the
prior two months.
Gas prices for U.S. drivers were $2.37 a gallon on average in
December, down 28 cents or nearly 11% from $2.65 in November,
according to the U.S. Energy Information Administration. Retail
gasoline prices have dropped from a nearly four-year high of $2.90
a gallon in May.
Alongside low gas prices, a strong dollar is likely keeping a
lid on the prices of goods, many of which are either purchased
overseas or compete with imports.
Rising interest rates and faster economic growth in the U.S.
compared with other developed economies have helped push the dollar
higher over the past year. The WSJ Dollar Index, which measures the
greenback against a basket of other currencies, rose about 4% from
December 2017 to December 2018.
Friday's data come a week after the Labor Department's December
employment report, which showed average hourly earnings for
private-sector workers rose 3.2% on the year in December, their
biggest full-year gain of the expansion. The unemployment rate rose
slightly last month, to 3.9%, but it remains at a very low level
historically.
Federal Reserve officials signaled they are unlikely to raise
interest rates for at least a few months while they assess the
impact of recent market volatility on the U.S. economy, according
to minutes of their Dec. 18-19 meeting.
The minutes, released Wednesday, indicated officials were
already growing more cautious about their policy path when they
agreed to raise rates last month, and thought they could be close
to ending their recent series of rate increases. Many cited muted
inflation pressures as a reason the central bank could afford to
take a wait-and-see stance.
Fed Chairman Jerome Powell on Thursday described inflation as
"low and under control," in remarks in Washington, D.C.
That gives central bankers "the ability to be patient and watch
patiently and carefully as we see the economy evolve," he said.
(END) Dow Jones Newswires
January 11, 2019 08:45 ET (13:45 GMT)
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