The Labor Department reported that consumer prices saw their biggest increase in 18 months, up 0.5 percent in December for a full-year 2010 reading of 1.5 percent.
Recent gains were driven by rising energy prices as “core” inflation – excluding food and energy – rose just 0.1 percent last month and registered the smallest annual gain since record keeping began 52 years ago at just 0.8 percent.
By category, it was the familiar story of higher energy costs within both the housing and transportation categories being offset by only modest price increases for shelter and motor vehicles, respectively. For example, as rent rose 0.1 to 0.2 percent in December, fuel and utility costs rose 0.7 percent, and while new and used automobile prices were flat, gasoline prices rose 8.5 percent.
Commodity inflation in the agriculture sector has yet to show up in the inflation statistics as food prices rose just 0.1 percent last month and were up 1.5 percent for all of 2010. And, lastly, the cost of medical care continued its relentless rise, up 0.2 percent last month and 3.3 percent higher than a year ago.
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