US consumer prices inched up just 0.1 per cent in January as energy prices tumbled sharply for the second straight month, according to a report today that helped soothe recent anxiety on inflation.
Excluding volatile food and energy costs, the Consumer Price Index, a widely used inflation gauge, rose 0.2 per cent for a fourth straight month in January, the US Labor Department said.
Wall Street economists had expected a 0.2 per cent rise in the CPI, both overall and excluding food and energy, but traders had braced for the possibility of larger gains after a report on Friday showed a big pickup in core producer prices.
The producer price report had fueled speculation that the Federal Reserve could step-up its so-far "measured" campaign of interest-rate rises to keep inflation in check.
The tame consumer price report helped allay those concerns. Prices for US government bonds and US stock futures rose, while the dollar held steady, after the data.
Over the past 12 months, the core CPI - the non-food, non-energy reading - is up 2.3 per cent, just a tick higher than for the period through December.