A customer holds a gas pump handle at an Exxon station in Vancouver, Wash.
U.S. consumer prices were flat for a second straight month in December as gasoline fell and food rose moderately, government data showed on Thursday, suggesting scope for further monetary easing should economic growth falter.
The Labor Department said its Consumer Price Index was unchanged. Economists polled by Reuters had expected prices to edge up 0.1 per cent.
Core CPI – excluding food and energy – inched up 0.1 per cent after rising up 0.2 per cent in November. That was in line with economists' expectations.
Although growth gained pace in the fourth-quarter, the recovery is expected to lose a step in the first half of this year mostly due to the debt crisis in Europe, which is already impacting on exports.
The Federal Reserve, which has cut overnight interest rates to near zero and bought $2.3-trillion in bonds, has pledged to keep borrowing costs exceptionally low until at least mid-2013.
But with unemployment remaining high, the housing market weak and inflation generally muted, some economists believe the U.S. central bank will launch a third round of asset purchases this year.
Last month, overall inflation was held back by gasoline prices, which fell 2.0 per cent – declining for a third straight month. Food prices rose a modest 0.2 per cent after nudging up 0.1 per cent in November.
Overall consumer prices rose 3.0 per cent year-on-year after increasing 3.4 per cent in November. That was in line with economists' expectations.
Core consumer prices were last month dampened by new motor vehicle costs, which fell 0.2 per cent – the third straight month of declines. Prices for used cars and trucks dropped 0.9 per cent, falling a fourth month in a row.
Apparel prices slipped 0.1 per cent, indicating discounting by retailers to attract holiday shoppers. Apparel prices rose 0.6 per cent in November.
But housing costs held up, with owners' equivalent rent rising 0.2 per cent last month, reflecting the rising demand for rental apartments as the weak housing market pushes Americans away from home ownership. This category rose 0.1 per cent in November.
In the 12 months to December, core CPI increased 2.2 per cent after rising by the same margin in November. This measure has rebounded from a record low of 0.6 per cent in October and the Fed would like to see that closer to 2 per cent.