U.S. consumer prices were flat for a second straight month in December as gasoline fell and food rose moderately, government data showed on Thursday, suggesting scope for further monetary easing should economic growth falter.
Core CPI - excluding food and energy - inched up 0.1 percent after rising up 0.2 percent in November. That was in line with economists' expectations.
Although growth gained pace in the fourth-quarter, the recovery is expected to lose a step in the first half of this year mostly due to the debt crisis in Europe, which is already impacting on exports.
The Federal Reserve, which has cut overnight interest rates to near zero and bought $2.3 trillion in bonds, has pledged to keep borrowing costs exceptionally low until at least mid-2013.
But with unemployment remaining high, the housing market weak and inflation generally muted, some economists believe the U.S. central bank will launch a third round of asset purchases this year.
Last month, overall inflation was held back by gasoline prices, which fell 2.0 percent - declining for a third straight month. Food prices rose a modest 0.2 percent after nudging up 0.1 percent in November.
Overall consumer prices rose 3.0 percent year-on-year after increasing 3.4 percent in November. That was in line with economists' expectations.
Core consumer prices were last month dampened by new motor vehicle costs, which fell 0.2 percent - the third straight month of declines. Prices for used cars and trucks dropped 0.9 percent, falling a fourth month in a row.
Apparel prices slipped 0.1 percent, indicating discounting by retailers to attract holiday shoppers. Apparel prices rose 0.6 percent in November.
But housing costs held up, with owners' equivalent rent rising 0.2 percent last month, reflecting the rising demand for rental apartments as the weak housing market pushes Americans away from home ownership. This category rose 0.1 percent in November.
In the 12 months to December, core CPI increased 2.2 percent after rising by the same margin in November. This measure has rebounded from a record low of 0.6 percent in October and the Fed would like to see that closer to 2 percent.