U.S. consumer prices inch up in January

U.S. consumer prices inched up just 0.1 percent in January as energy prices tumbled sharply for the second straight month, according to a report on Wednesday that may help quell recent anxiety on inflation.

Excluding volatile food and energy costs, the Consumer Price Index, a widely used inflation gauge, rose 0.2 percent for a fourth straight month in January, the Labor Department said.

Wall Street economists had expected a 0.2 percent rise in the CPI, both overall and excluding food and energy, but traders had been bracing for the possibility of larger gains after a report on Friday showed a big pickup in core producer prices.

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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 could allay those concerns.

The consumer-price report showed energy costs dropped 1.1 percent, with fuel oil prices off 5.2 percent, natural gas costs down 3.0 percent and gasoline off 2.1 percent.

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However, energy prices have risen sharply over the past year and a renewed climb in crude oil prices, which topped $50 a barrel on Tuesday, threatens further gains.

The department said food costs rose just 0.1 percent, as did prices for housing, recreation and education and communication. Apparel prices rose 0.3 percent, a turnaround from a 0.4 percent December drop, while medical care prices continued their steep ascent with a 0.4 percent increase.