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Inflation Tame for 2009
The Labor Department reported that consumer prices were
up a modest 0.1% in December, capping a year in which
inflation was tame, although consumers still felt squeezed
due to stagnant wages, job losses and higher costs for
things like health care and education. For the 2009 year,
consumer prices increased 2.7%, as energy costs offset a big
drop in food prices. The gain in consumer prices for 2009
followed a 0.1% increase in 2008, a year when consumers
experienced high gas prices mid-year and then massive
deflation at the end of the year after the meltdown on Wall
Street occurred and the economy tanked. Energy costs for
2009 climbed 18.2%, led by a 53.5% increase in gasoline
costs. However, food prices shrank 0.5% after jumping 5.9%
in 2008. Core inflation, which excludes food and energy,
grew 1.8% for the 12 months ending in December, matching the
1.8% gain in 2008. Both gains were the smallest since a 1.1%
gain in 2003. Many analysts expect core inflation to remain
tame in the first half of 2010, although consumers whose
wages have lagged behind inflation or are out of work will
not feel relieved.
Meanwhile, the Labor Department said producer prices grew
a modest 0.2% in December, following a 1.8% surge in
November. Energy costs fell 0.4% in December as the price of
gasoline dropped 3.2%. Natural gas prices fell 1.9%.
However, food prices jumped 1.4%. Excluding energy and food,
core inflation was flat in December. Prices at the wholesale
level grew 4.4% in 2009, compared to a 0.9% drop n 2008.
That big swing reflected a hike in energy costs in 2009.
However, core inflation at the wholesale level grew a tame
0.9% in 2009, after surging 4.5% in 2008.
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Date Last Updated: 01/22/2010
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