Tame Consumer Price Rise Eases Fears By Tim Ahmann WASHINGTON (Reuters) - Consumer prices inched up just 0.1 percent in January as energy prices tumbled sharply for the second straight month, according to a report on Wednesday that helped soothe recent anxiety on inflation. Excluding volatile food and energy costs, the Consumer Price Index, a widely used inflation gauge, rose 0.2 percent for a fourth straight month in January, the Labor Department said. Wall Street economists had expected a 0.2 percent rise in the CPI, both overall and excluding food and energy, but traders had braced for the possibility of larger gains after a report on Friday showed a big pickup in core producer prices. The producer price report had fueled speculation that the Federal Reserve could step-up its so-far "measured" campaign of interest-rate rises to keep inflation in check. The tame consumer price report helped allay those concerns. Prices for U.S. government bonds and U.S. stock futures rose, while the dollar held steady, after the data. Over the past 12 months, the core CPI -- the non-food, non-energy reading -- is up 2.3 percent, just a tick higher than for the period through December. "Inflation at the end of the day is headed higher, it's just not going to happen that dramatically this year," said Mark Vitner, an economist at Wachovia Securities in Charlotte, North Carolina. "This leaves the Fed exactly where they are." The consumer-price report showed energy costs dropped 1.1 percent, with fuel oil prices off 5.2 percent, natural gas costs down 3.0 percent and gasoline off 2.1 percent. However, energy prices have risen sharply over the past year and a renewed climb in crude oil prices, which topped $50 a barrel on Tuesday, threatens further gains. The department said food costs rose just 0.1 percent, as did prices for housing, recreation and education and communication. Apparel prices rose 0.3 percent, a turnaround from a 0.4 percent December drop, while medical care prices continued their steep ascent with a 0.4 percent increase. While the rise in inflation was relatively mild last month, a slight drop in average weekly earnings meant workers still lost ground to prices. Over the last 12 months, inflation-adjusted average weekly earnings are down 0.7 percent, the department said. The International Council of Shopping Centers and UBS said in a separate report that U.S. chain store retail sales dipped 0.1 percent last week and were up 1.8 percent from a year ago. In another report, the Mortgage Bankers Association said applications for U.S. home mortgages decreased last week as a drop in home-buying offset a slight increase in refinancing. Quelle "Tame Consumer Price Rise Eases Fears" : reuters.com Main page for "Tame Consumer Price Rise Eases Fears"