Posted: Feb 19, 2010 1:41 PM by Brian Waldrep
Source: Associated Press
The Federal Reserve seems likely to keep interest rates at record lows for several more months after news Friday that consumer prices excluding food and energy fell in January.
It was the first time such prices have fallen in any month since 1982.
The report suggested that short-term rates can remain low to strengthen the economic recovery without triggering inflation.
The news of low inflation eased some concerns and helped support stock prices. In mid-afternoon trading, the Dow Jones industrial average rose about 9 points, or 0.1 percent.
Broader stock averages also gained modestly. Bond prices were little changed, and the
dollar was mixed against other major currencies.
Overall consumer prices edged up 0.2 percent in January, the Labor Department said. But excluding volatile food and energy, prices fell 0.1 percent.
That drop, the first monthly decline since December 1982, reflected falling prices for housing, new cars and airline fares.
The Consumer Price Index report for January did show some price increases in scattered areas. The price of medical care rose by 0.5 percent.
It was the biggest one-month gain in two years. And the cost of tobacco products increased 0.4 percent, the biggest increase since November.
But the price of airline tickets dropped by 2.5 percent. And new-car prices fell 0.5 percent. Clothing costs dropped 0.1 percent.