The US Labor Department reported today that that consumer prices jumped 0.5 per cent in December as gasoline prices staged a momentary rebound.
However, for the year as a whole, that consumer prices rose by 2.5 per cent in 2006, the best showing since prices had increased by just 1.9 per cent in 2003.
In other economic news, the number of newly laid off workers filing claims for unemployment benefits fell to a seasonally adjusted 290,000 last week, the lowest level in 11 months and an indication that the labour market began the new year in good shape in spite of weakness in housing and vehicle manufacturing.
The Commerce Department reported that construction of new homes rose by 4.5 per cent in December to a seasonally adjusted annual rate of 1.642 million units, raising hopes that the worst of the housing slowdown may be coming to an end.
However, analysts cautioned that the figure was heavily influenced by warmer-than-normal weather last month.
The 0.5 percent December increase in consumer prices had been expected, given that gasoline costs rebounded during the month.
However with crude oil prices setting 19-month lows in recent weeks, the expectation is that gasoline costs will resume their downward trend and stay well below the record level of over $3 per gallon, set last summer.
For all of 2006, energy costs rose 2.9 per cent, a significant slowdown after an increase of 17.1 per cent in 2005 and 16.6 per cent in 2004. That price moderation occurred in recent months.