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Archive for Thursday, February 21, 2002

Consumer inflation inches up

February 21, 2002

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— Higher prices for gasoline, medical care and some food items contributed to a mild rise in consumer inflation in January. But prices for clothing, cars, lodging and computers fell, providing shoppers with some bargains.

The Consumer Price Index, a closely watched gauge of inflation, rose 0.2 percent last month after dipping 0.1 percent in December, the Labor Department reported Wednesday.

Excluding energy and food prices, which can swing widely from month to month, the "core" rate of inflation increased 0.2 percent in January, up slightly from a 0.1 percent advance the month before.

Even with the modest advances in both overall and core inflation in January, many economists believe consumer prices will remain steady in the months ahead because companies will continue to find it difficult to raise prices even as the economy tries to pull out of recession.

For the 12 months ending in January, consumer prices rose by just 1.1 percent, the smallest increase since the 12 months ending in December 1986.

"Inflation remains completely under control," said Bill Cheney, chief economist at John Hancock Financial Services. "Goods and even services are cheap, and businesses are eager for sales at almost any price. Bargains abound."

Higher gasoline prices were responsible for much of the increase in January's CPI, economists said. After falling in November and December, gasoline prices rose 2.7 percent in January, the biggest increase in four months. Even with the rise, gasoline prices remain 22.7 percent below levels seen a year ago.

Gasoline prices, while still considered moderate, were lifted by a firming of crude-oil prices last month, reflecting production cuts by oil-producing nations.

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