Cost of Living in US Was Probably Little Changed in December

Jan. 19 (Bloomberg) -- The cost of living in the U.S. was probably little changed in December as stores cut prices to boost holiday sales, economists said before a report today.

The consumer price index rose 0.1 percent after holding steady in November, according to the median forecast of 78 economists surveyed by Bloomberg News. Other reports may show housing starts dropped from the highest level in more than a year and fewer Americans filed claims for jobless benefits.

Retailers from Williams-Sonoma Inc. to Macy’s Inc. used discounts to attract customers constrained by stagnant incomes and property values that keep falling as the housing market struggles to recover. Less inflation means Federal Reserve officials have leeway to take additional steps to spur growth should the economic expansion stumble.

“Price pressures have eased and we may see a bit more of that in coming months,” said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit. “The most likely path is for inflation to subside to a more modest pace, in line with Fed expectations.”

The Labor Department’s price report is due at 8:30 a.m. in Washington. Economists’ estimates ranged from a decline of 0.1 percent to a gain of 0.3 percent.

Consumer prices excluding food and fuel rose 0.1 percent last month after climbing 0.2 percent in November, according to the Bloomberg survey median. Compared with December 2010, the so-called core index was probably up 2.2 percent, matching November’s year-over-year gain, economists projected.

Fed’s Gauge

Fed policy makers’ preferred price gauge, which is issued by the Commerce Department and is tied to consumer spending, rose 1.7 percent in the year ended in November. That is at the lower end of officials’ long-run forecast of 1.7 percent to 2 percent.

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