US consumer prices rise marginally, demand for electricity up

WASHINGTON (REUTERS) - US consumer prices rose in January as unseasonably cold weather boosted demand for electricity and heating fuel, but inflation pressures remained muted.

The Labor Department said on Thursday its Consumer Price Index edged up 0.1 per cent, with increases in the cost of household energy accounting for most of the increase.

The CPI had risen 0.2 per cent in December and last month's gain was in line with economists' expectations.

In the 12 months to January, consumer prices advanced 1.6 per cent after increasing 1.5 per cent in December.

Stripping out the volatile energy and food components, the so-called core CPI also rose 0.1 per cent for a second straight month. In the 12 months to January, core CPI rose 1.6 per cent, slowing from a 1.7 per cent increase in December and the smallest rise since June.

With consumer inflation continuing to run below the Federal Reserve's 2 per cent target, monetary policy is likely to remain accommodative for a while even as the US central bank reduces the amount of money it is injecting into the economy each month.

Last month, electricity prices rose 1.8 per cent, the largest gain since March 2010. Natural gas prices surged 3.6 per cent, while heating fuel jumped 3.7 per cent. Those increases offset a 1.0 per cent fall in the price of gasoline.

Within the core CPI, there were increases in rents, medical care costs and prescription drugs. Tobacco prices recorded their largest gain since July. These tend to rise at the beginning of the year because of tax hikes.

Elsewhere, there were declines in the price of new motor vehicles, prices for used cars and trucks and apparel. Airline fares dropped 2.2 per cent.

Join ST's Telegram channel and get the latest breaking news delivered to you.