Government Says Inflation Was Tame In November

There was little to no inflation in the U.S. economy last month, at least according to the U.S. Labor Department.

The "core" Consumer Price Index, excluding food and energy prices, rose 0.2 percent last month and for the year, is running at 2.2 percent.

Gasoline prices have been falling in recent weeks, keeping November's numbers low in relation to October. However, despite the recent declines, gas prices are still nearly nine percent higher than a year ago.

Food prices barely rose in November, but are still up 4.6 percent in the last 12 months, more than double the inflation rate.

There is also little sign of inflation at the wholesale, or producer level. The government Producer Price Index for November rose 0.3 percent - just 0.1 percent when you exclude food and energy. Yet economist Joel Naroff, of Naroff Economic Advisors, saw something in that report that he said was a cause for worry.

Sign of trouble?

"There was another surge in food prices and those are frequently passed through to the consumer," Naroff said. "The broad based nature of the increase in food costs points to more pain at the supermarket. Except for energy, which was up minimally, other consumer goods prices rose at a disturbing pace. The increases were not that high but moderately increasing consumer goods costs are not what the Fed is hoping to see."

The markets have recently signaled that inflation is not a concern. The prices of oil, gold and commodities have recently fallen sharply amid concerns that Europe's debt crisis will prove to be a significant drag on the world economy in 2012.