US inflation rises slightly in December

US consumer prices rose modestly in December, a government report showed today, suggesting the Federal Reserve has little to …

US consumer prices rose modestly in December, a government report showed today, suggesting the Federal Reserve has little to fear from inflation pressures in the economy.

The consumer price index, the most widely used gauge of US inflation, rose 0.2 per cent after falling 0.2 per cent in the previous month.

The so-called core rate, which strips out volatile food and energy prices, rose 0.1 per cent. Both measures matched Wall Street forecasts.

The report is the third on prices this week. Import prices data out and wholesale prices all indicated the Fed has room to leave interest rates at 45-year lows without worrying about inflation.

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Yesterday, Fed governor Mr Ben Bernanke said monetary policy could be "patient" given the absence of inflationary pressure. "Inflation is not even a remote risk in the US," Mr Bernanke said. "Because inflation is so low, monetary policy can afford to be patient to be sure that the recovery is sustained."

A separate report showed real earnings fell 0.6 per cent in December, after a 0.6 per cent rise in November.