January 16, 2009

Consumer prices dropped in December

The Consumer Price Index dropped by 0.7 percent in December, falling for the fifth consecutive month, the U.S. Department of Labor said Tuesday.

Prices fell 1.7 percent nationally in November.

The decline in December fell short economists expectations, but still indicates a reduction in consumer spending. Economic expectations do not change the reality of the figures, but mark how much of a jolt markets might take.

In December, core inflation, taking out the influences of food and energy costs, was virtually unchanged.

Inflation for the year came in at minus 0.1 percent, but core inflation for the year gained 1.7 percent, the government said.

On balance, for wage earners, December was a good month. While prices fell 0.7 percent, wages increased 0.9 percent during the month, the report said.