CPI : Inflation Rate Steady

Except for energy costs, inflation remained well contained in December.

The consumer price index rose 0.2 percent in the month, the Labor Department said Friday. The core rate of inflation, which excludes food and energy prices, rose 0.1 percent.

Both figures were below the consensus estimate of a panel of economists surveyed by CBS.MarketWatch.com, who forecast a gain of 0.3 percent in the CPI and 0.2 percent in the core.

For all of 1999, consumer prices rose 2.7 percent, the most since 1996's 3.3 percent. The CPI rose 1.7 percent in 1997 and 1.6 percent in 1998 as the global economic crisis drove commodity prices lower. That trend reversed in 1999 as energy costs jumped 13.4 percent.

However, the core rate dipped to 1.9 percent in 1999 from 2.4 percent in 1998, the smallest since 1.5 percent in 1965.

The Federal Reserve has bumped overnight interest rates three times in a bid to cut off inflation's air supply. Most observers expect a fourth rate hike in early February. On Thursday, Fed Chairman Alan Greenspan warned that inflationary imbalances are building in the economy.

But he acknowledged that actual -- as opposed to potential -- inflation has remained subdued.

In fact, overall inflation decelerated in the fourth quarter. The CPI rose at a 2.2 percent annual rate and the CPI core rose at a 2 percent rate, just a bit faster than the cyclical low rate last summer.

In December, the CPI was boosted by a 1.4 percent rise in energy costs. Fuel oil prices rose 5.9 percent on a seasonally adjusted basis while gasoline rose 4.1 percent. Both fuels have risen more than 30 percent in price in the past year.

Food prices rose 0.1 percent in December, bringing the yearly rise to 1.9 percent. Fresh vegetable and beef prices rose while poultry prices fell.

Outside of energy costs - which boosted transportation costs by 0.7 percent - inflationary pressures were nearly absent. Only medical-care costs, which rose 0.4 percent for the second month in a row, presents any signs of trouble. Prescription drug prices rose 0.4 percent to bring the yearly gain to 6.1 percent.

Elsewhere, price increases were moderate. Housing costs rose 0.1 percent. Apparel prices were flat. Recreation, education and communications, and the "other goods and services" subindexes all rose 0.2 percent in December.

In a separate report, the Labor Department said real average weekly earnings rose 0.2 percent in December and 3.4 percent in 1999.