Posted: January 16, 2013
Consumer prices rose just 1.7 percent in 2012, the Bureau of Labor Statistics reports. That's about half the pace of 2011 — when prices went up 3 percent. A sharp slowing in the increase of gas prices was a major factor. The news means interest rates will likely stay low.
In December, BLS says, prices were unchanged.
One major reason inflation slowed last year: Gas prices went up just 1.7 percent, after gains of 13.8 percent in 2010 and 9.9 percent in 2011. Also, food costs rose 1.8 percent. BLS says that was "a deceleration" from the 4.7 percent increase in 2011.
As Reuters writes, the news that inflation remains in check "should help give the Federal Reserve room to prop up the economy by staying on its ultra-easy monetary policy path." In other words, there's no reason to think the Fed will need to start pushing up short-term interest rates anytime soon.
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