Consumer prices fall

December decline attributed to dip in energy costs

January 20, 2005|Associated Press

WASHINGTON -- A surge in the cost of gasoline and other energy products pushed consumer prices up by 3.3 percent in 2004, the biggest jump in four years, but relief may be on the way. Consumer prices actually dipped in December as energy costs moderated.

The Labor Department reported yesterday that its closely watched Consumer Price Index edged down 0.1 percent last month, reflecting the biggest drop in energy prices since July.

Price pressures last year were dominated by a 16.6 percent surge in fuel bills, the biggest jump in 14 years, as gasoline prices jumped by 26.1 percent, natural gas was up 16.4 percent, and home heating oil rose by 39.5 percent.

The Labor Department said the number of laid-off workers filing new claims for unemployment benefits totaled 319,000 last week, a drop of 48,000 from the previous week. It was the biggest one-week improvement in more than three years and relieved worries that the job market might be weakening because of two prior weeks of rising jobless claims.

Construction on new homes and apartments, after being depressed by rainy weather in November, soared 10.9 percent in December, the Commerce Department reported.

In another report, the Federal Reserve released its latest snapshot of business activity around the country showing that 11 of its 12 regional banks reported the economy continued to expand through early January with shoppers and tourists keeping stores busy.

In New England, the Boston Fed reported that businesses in the region were ''fairly upbeat." Retail sales during the holiday season rose and tourism strengthened measurably. Sales at manufacturers rose; insurers said demand increased; and ''contacts are positive about prospects for continued expansion in 2005."

The Fed report, which will be used when policy-makers meet to set interest rates Feb. 1-2, found no areas of worrisome inflation, saying that ''wage pressures generally remained modest," confirming the consumer price index findings.