(Reuters) — Consumer prices in the United States were flat for a second straight month in January, providing scope for the Federal Reserve to maintain its very accommodative monetary policy stance to stimulate the sluggish economy.
The consumer price index (CPI) was held back by weak gasoline prices and food prices, which were unchanged after rising over the past months, the Labor Department said.
Economists polled by Reuters had expected the CPI to edge up 0.1 per cent. In the 12 months through January, consumer prices rose 1.6 per cent, the smallest gain since July. They had advanced 1.7 per cent in December.
However, consumer prices excluding food and energy rose 0.3 per cent — the largest gain since May 2011. The so-called core CPI had increased 0.1 per cent in December.
In the 12 months through January, core CPI increased 1.9 per cent after rising by the same margin in December. That is just below the Federal Reserve's two per cent goal.
The U.S. central bank embarked on an open-ended bond buying program last year and said it would keep it up until it saw a substantial improvement in the outlook for the labour market. It hopes the purchases will drive down borrowing costs.
The Federal Reserve also has committed to hold interest rates near zero until unemployment reaches 6.5 per cent, provided inflation does not threaten to push over 2.5 per cent.
But minutes of the Jan. 29-30 policy meeting published on Feb. 20 suggested it might have to slow or stop the asset purchases before it sees an acceleration in job growth because of concerns over the costs of the program.
Gasoline prices fell three per cent after dropping 1.9 per cent the prior month. But the decline in gas probably has run its course as prices at the pump have increased 44 cents so far this year.
Elsewhere, apparel prices increased 0.8 per cent after gaining 0.1 per cent in December. New motor vehicle prices rose 0.1 per cent after advancing 0.2 per cent the prior month.
Prices for used cars and trucks rose 0.2 per cent after six consecutive months of declines. Airline fares rose for a fifth month in a row.
Housing costs edged up, with owners' equivalent rent rising 0.2 per cent.
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