Consumer Prices Up 0.3% in January

But inflation over past 12 months lowest in a half-century
By Newser Editors and Wire Services
Posted Feb 20, 2009 9:07 AM CST
Consumer prices rose by the most in six months in January, propelled by higher energy costs.   (AP Photo/The Blade, Lisa Dutton)
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(Newser) – Consumer prices rose by 0.3% last month, the Labor Department said today, the biggest monthly increase since a 0.7% rise in July. Higher energy costs fueled the climb, and most economists and the government believe the recession will keep prices in check this year. That's because inflation has been flat over the past year, the lowest reading in more than a half-century.

Even with the January increase, which was in line with economists' expectations, inflation for the 12 months ending in January was zero. That's the lowest reading since prices actually fell by 0.4% for a 12-month period ending in August 1955. While falling prices appeal to consumers, the Federal Reserve is on alert about the possibility of deflation, which can make a recession even worse by dragging down Americans' wages, and clobbering already-stricken home and stock prices.