Tame Inflation, Falling Wages Signal Weak US Recovery

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By Veronica Smith (AFP) – 4 hours ago

WASHINGTON — US consumer prices barely rose in December amid a sluggish recovery from recession, official data showed Friday, as falling wages pinched spending that drives most of the world's largest economy.

The consumer price index rose less than expected in December, by 0.1 percent from November, the Labor Department reported in seasonally adjusted data.

Most analysts had forecast a stronger CPI rise of 0.2 percent.

The so-called "core" CPI, which excludes food and energy prices and is used by the Federal Reserve to forecast future inflation, rose 0.1 percent as expected.

Inflation "was broad-based, with the indexes for food, energy, and all items less food and energy all posting modest increases," the Labor Department said.

The year ended with the inflation rate at 2.7 percent from a year ago, a sharp increase over 0.1 percent inflation in 2008, the first full year of the worst downturn since the Great Depression.

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