Inflation Rises Slightly in 2009, as Wages Dip 1.6 Percent

AP

Consumer inflation was tame in 2009, with prices rising 2.7 percent. Yet families felt squeezed as their spending power sank in the face of falling wages, job losses and higher prices for energy, medical care and education.

WASHINGTON -- Consumer inflation was tame in 2009, with prices rising 2.7 percent. Yet families felt squeezed as their spending power sank in the face of falling wages, job losses and higher prices for energy, medical care and education.

A surge in energy prices last year offset the biggest drop in food costs in nearly a half century.

The Labor Department says its Consumer Price Index rose a modest 0.1 percent in December. Excluding food and energy, prices were also up just 0.1 percent last month.

A separate report showed inflation-adjusted weekly wages for the 12 months ending in December were down 1.6 percent, the biggest decline since 1990. Slack wages and scarce job creation have slowed consumer spending, hindering the economy's ability to mount a strong recovery.