The US economy saw little inflation in 2020 amid the disruptions caused by the coronavirus pandemic, with the final month of a year seeing only a slight increase as gasoline prices rose, according to government data Wednesday.
The consumer price index (CPI) increased 1.4 percent for 2020, the Labor Department said in the report reflecting a year during which the economy plunged as the pandemic shut businesses nationwide.
That was down from the 2.3 percent inflation in 2019.
Amid a still-tentative economic recovery, CPI rose 0.4 percent in December, seasonally adjusted, in line with analysts’ forecasts, accelerating from the 0.2 percent increase in November, according to the report.
However the “core” index excluding food and energy rose 0.1 percent in December, and for 2020 the increase was 1.6 percent — far below the central bank’s 2.0 percent goal.
Kathy Bostjancic of Oxford Economics said the muted reading means the Federal Reserve is unlikely to soon change its commitment to keep interest rates low to spur employment and to continue buying tens of billions of dollars in bonds.
“The benign core inflation readings support our call that the Fed does not lift the policy rate from the effective lower bound until 2024,” she said in an analysis.
The Labor Department said the December increase was driven by an 8.4 percent surge in gasoline prices.
The food index, both for meals at home and away, rose 0.4 percent.
US Inflation Stays Muted As Chaotic 2020 Ends The British Journal Editors and Wire Services/ International Business Times.