MercoPress. South Atlantic News Agency

US consumer prices up 0.5% in December; 2.5% in 2006

The United States consumer price index increased 0.5% last December, the sharpest rise in eight months, ending 2006 at 2.5% which however is an improvement over the 3.4% of 2005, reported Thursday the US Labor Department.

In December, energy prices shot up by 4.6% after a 0.2% fall in November and much larger decreases in September and October. The overall December rise was the highest since last April's 0.6%. The December increase in energy prices was the biggest in 11 months, since 5% price jump last January, the department said. Core consumer prices excluding food and energy costs, increased 0.2% in December after being unchanged in November. In other economic news, home building in December rebounded 4.5% to an average annual pace of 1.64 million units, the highest since last September, reported the Department of Commerce. However in 2006 the number of new homes was in the range of 1.8 million, 12.9% less than in 2005 and the lowest since 1991. The Labor Department also reported that the number of workers filing new claims for jobless benefits dropped by a surprisingly large 8,000 last week and stabilized at 290.000, the lowest in eleven months. The number of people receiving unemployment benefits increased by 120.000 and reached 2.53 million in the week ending January 6, the highest in almost a year, said the Labor Department. Markets are closely watching the evolution of data and for signals from the US monetary officials. The Federal Reserve has said it remains wary about the potential for inflation to flare up, though expectations for price rises have been relatively well contained. According to information so far the Federal Reserve is expected to keep U.S. interest rates on hold at 5.25%, when its policy-setting committee meets later this month on January 30/31.