“For the next few years, it’s unlikely that we’re going to see inflation really push up above that 2% level,” that is the Fed’s longer-term goal, Daniel Silver, an economist at JPMorgan Chase & Co. in New York, said before the report.
Fed Chairman Ben S. Bernanke said earlier this week tried to assuage investors that the central bank will remain vigilant against any flare-up in prices.
“There seems to be a pretty strong presumption that we should be aggressive in monetary policy,” he said at the University of Michigan’s Gerald R. Ford School of Public Policy in Ann Arbor. “We will be paying very close attention to make sure that inflation stays well-contained as it is today.”
The core measure last month was restrained by declines in the cost of used cars, clothing and medicinal drugs.
Tepid global growth and falling energy costs, including cheaper gasoline, are mitigating inflation risks. Energy costs decreased 1.2% in December. Gasoline fell 2.3%.
Fuel costs so far this year have held near a 2012 low reached in December. A gallon of regular gasoline at the pump dropped to a $3.30 average on Jan. 14, close to the $3.22 reached on Dec. 19 that was the lowest in a year, according to AAA, the biggest U.S. auto group.
Low fuel prices may help Americans’ buying power even as higher taxes restrain their discretionary spending. The fiscal pact passed by Congress on Jan. 1 allowed the payroll tax used to pay for Social Security benefits return to the 2010 level of 6.2% from 4.2%. That reduces the paycheck by about $83 a month for someone who earns $50,000.
A separate report from the Labor Department today showed wages adjusted for inflation climbed 0.3% on average in December after increasing 0.6% the prior month. For all of 2012, they were up 0.3%.
Retail sales rose more than forecast in December as holiday shoppers were little influenced by Washington’s budget turmoil. Purchases climbed 0.5 percent, the biggest gain in three months, after a revised 0.4 percent increase in November that was larger than previously reported, according to Commerce Department data released yesterday.