US consumer prices fell in December amid plunging energy costs which may bolster expectations for a cut in US interest rates later this month.
The Consumer Price Index (CPI), the main US inflation gauge, eased 0.2 per cent last month. Excluding the volatile food and energy components, the so-called core CPI increased 0.1 per cent.
During all of 2001, the CPI was up only 1.6 per cent, the smallest gain since a matching 1.6 per cent rise in 1998. The core CPI rose 2.7 per cent last year.
The latest data adds to evidence that inflation is calm in the recession-mired US economy and it helps give the Federal Reserve leeway to cut interest rates at its upcoming meeting on January 29th, a move that many on Wall Street have been expecting.
US economists had expected the December CPI to be unchanged and the core rate to edge up by 0.1 per cent.