January rise in consumer prices largest since July

Consumer prices rose modestly in January, propelled by higher energy costs, but 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. The Labor Department said today that consumer prices rose by 0.3% last month, the biggest monthly increase since a 0.7% rise in July. But 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. Core inflation, which excludes energy and food, showed a modest increase of 0.2%, slightly higher than the 0.1% gain economists expected. Over the past 12 months, core inflation rose 1.7%, the lowest reading since a similar increase for the 12 months ending in August 2004.