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US consumer prices flat in January for 2nd month

Published on NewsOK Modified: February 21, 2013 at 11:02 am •  Published: February 21, 2013
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Gas prices averaged $3.78 a gallon nationwide on Thursday, according to AAA. That's up 47 cents from just a month ago.

Some economists said the increase in core prices could continue, causing a slight pickup in inflation. Core prices rose by the most in 20 months. They increased largely because of big jumps in the cost of clothing, hotel costs, and air fares. The gains in clothing and hotel costs were the most in about 18 months.

But increases at that magnitude are unlikely to be repeated, said Paul Ashworth, an economist at Capital Economics.

"At a time when the Fed is becoming more concerned about the costs of its unconventional monetary policies, it is striking that the inflation outlook remains benign," Ashworth said.

If the Fed feared that prices were rising too fast, it might have to raise interest rates. The Fed has kept the benchmark interest rate it controls at nearly zero, a record low, for more than four years.

Low inflation leaves consumers with more money to spend, which benefits the economy.

Inflation slowed dramatically last year. Consumer prices rose only 1.7 percent in 2012, down from 3 percent in 2011.

With job gains and economic growth steady but modest, many businesses are reluctant to raise prices for fear of losing customers. That's helped keep inflation mild. Workers also aren't able to demand higher wages when growth is weak. That limits their ability to spend more.

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Follow Chris Rugaber on Twitter at https://Twitter.com/ChrisRugaber