Business

US consumer prices rose 0.1 percent last month

Consumers like to see prices stay low, but that can have the undesirable effect of keeping the economy sluggish.
Gene J. Puskar /Associated Press
Consumers like to see prices stay low, but that can have the undesirable effect of keeping the economy sluggish.

WASHINGTON — US consumer prices barely rose last month as a sharp increase in energy costs was offset by cheaper clothing, cars, and air fares. Inflation remains mild.

The Labor Department said the consumer price index rose 0.1 percent in January, down from a 0.2 percent gain in December. Prices have risen 1.6 percent in the past 12 months. Excluding the volatile food and energy categories, core prices rose just 0.1 percent last month and 1.6 percent in the past year.

The year-over-year increase in core prices was the smallest in seven months. That “confirms the fact that inflationary pressures remain well contained,’’ said Martin Schwerdtfeger, a TD Bank economist.

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Inflation has been held back by sluggish growth and a tough job market, which makes it harder for retailers and others to raise prices.

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Consumer prices rose just 1.5 percent in 2013, down from 1.8 percent in 2012. Both figures are below the Federal Reserve’s 2 percent target.

Most Americans prefer lower prices, but economists warn that super-low inflation may slow economic growth. It can lead consumers to postpone purchases and makes inflation-adjusted interest rates higher, potentially discouraging borrowing. The Federal Reserve has expressed concern about low inflation. If it stays below target, the Fed could extend its stimulus.

Associated Press