U.S. January Consumer Prices Rise 0.1%; Core Rate Up 0.2% [View All]

Feb. 23 (Bloomberg) -- Prices paid by U.S. consumers rose less than forecast in January, suggesting companies are having only limited success in passing on higher raw materials costs, a government report showed.

The 0.1 percent rise followed no change in December, the Labor Department said today in Washington. Economists forecast a 0.2 percent rise during the month, according to the median estimate in a Bloomberg News survey. Excluding food and energy, core prices increased 0.2 percent for a fourth month, led by higher costs for tobacco, medical care and automobiles.

Some companies such as airlines keep offering discounts to lure customers amid increased competition and excess capacity in many industries even as rising demand boosts supply costs. Economic growth and the threat that inflation may accelerate suggest Federal Reserve policy makers will keep raising interest rates this year.

``There is still very limited pricing power,'' said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc., a New York-based forecasting firm, before the report. ``There is still a lot of spare capacity around the world. Growth around the world isn't so hot that we are ripping into spare capacity at a rapid rate.''

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