U.S. price index follows growth of worldwide inflation rates

U.S. inflation rate rises slowly

The inflation rate as reflected by the U.S. Consumer Price Index grew 1.5 percent over the past year through December, up from 1.1 percent in November, as Americans had to bear higher prices of gas, food and grocery items last month due to pressure from outside economies.

According to the Bureau of Labor Statistics which released the figures, the price index increased 0.5 percent last month compared to a 0.1 percent growth from November. It was the biggest monthly increase since June 2009. Some forecasts had the increase at 0.4 percent. Gas prices were responsible for the most part, with prices shooting up 8.5 percent in December.

The increase in the inflation rate may indicate that a recovery is underway, but it can also diminish the spending power of American consumers who are still grappling with a high unemployment rate and stagnant wages.

"It is disconcerting that inflation is starting to accelerate, and you have to wonder, with gas prices moving above $3 a gallon, whether the rate of inflation will continue to escalate," Bernard Baumohl, Economic Outlook Group chief global economist told CNN.

Surging gas prices have made the most impact on consumers but prices of food items have been relatively static, growing at only 0.1 percent for the month. The core CPI, which excludes food and energy prices, remains at its lowest level in history.

The upward trend of the inflation rate in the U.S. follows that of other economies but the U.S. pace is not that fast. The CPI in the eurozone posted a 2.2 percent hike for 2010, while China said its CPI jumped 5.1 percent in the last 12 months until November.

Posted by James Fried on Saturday January 15 2011, 3:36 AM EDT. Ref: CNN. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0