US consumer prices fell 0.1 percent in December

Over the past 12 months, the all items index increased by 0.7% before the seasonal adjustment. Food costs decreased 0.2 percent last month compared with November.

She added: “Air fares surged by 46% month on month from November to December – the highest since 2002”.

The Fed, which has a 2 per cent inflation target, tracks a price measure that is running well below the core CPI. The 2.1 per cent rise in the core for the 12 months ending in December followed a 12-month rise of 2 per cent in November. Food prices fell for a second straight month.

“These five groups of goods and services (weight: 41.1) contributed 90.2 per cent to the increase in the CPI for the month of December 2015”, it said in a statement. Then again, Thread needle Street will have been supported by the ascent in purported center expansion – stripping out unpredictable sustenance and energy charges – to 1.4%, flagging a relentless come back to the objective when the impact of oil and nourishment costs fade.

The Federal Reserve has said it would carefully monitor “actual and expected progress toward its inflation goal” of 2% as it considers subsequent rate increases in the year ahead.

The U.S. Department of Labor reported that its consumer price index, a key gauge of retail inflation, slipped 0.1 percent for December. Over the past year the food index has increased 0.8 percent on an unadjusted basis. The boost from the so-called base effects could, however, be limited by lower oil prices, which are near 12-year lows.

“The CPI for the period of January-December 2015 registered an increase of 2.1 per cent over the same period past year”. This was the smallest price gain since last August. Estimates ranged from little changed to a 0.3 percent advance.

Energy prices and a stronger dollar have been major factors holding down inflation.

Food prices dipped 0.2%, led by a sharp decline in meats, poultry, fish and eggs. Shelter prices have risen year- over-year by 3.2%.

Building permits declined 3.9 percent to a 1.23 million-unit rate in December, pulled down by an 11.4 percent plunge in permits for multi-family buildings.

“The thing that’s been driving everything is energy – that’s obviously going to weigh on this headline reading”, Jacob Oubina, US economist at RBC Capital Markets LLC in NY, said before the report.