Inflation watch: Consumer prices climb

Nancy Marshall-Genzer Jan 18, 2007


BOB MOON: Consumer prices climbed last month. But even that news isn’t so bad. Economists say inflation is still in check. Nancy Marshall Genzer explains.

NANCY MARSHALL GENZER: The Labor Department reported this morning that the Consumer Price Index was up a half a percent in December.

That’s the biggest jump in eight months, but economists say, look at the big picture.

The higher consumer prices are mainly due to the cost of energy, which soared last month. Core consumer prices, excluding food and energy only rose two tenths of a percent.

David Wyss, chief economist at Standard & Poor’s says the Federal Reserve will focus on core prices when deciding whether it needs to raise interest rates to fight inflation.

DAVID WYSS: The other thing is energy prices are very volatile. They go up and down. You don’t want to be swinging monetary policy around because of what happens in the Middle East.

Wyss says with core prices under control, the Fed isn’t likely to raise interest rates when it meets later this month.

In Washington, I’m Nancy Marshall Genzer for Marketplace.

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