U.S. consumer prices rose modestly in December as expected, a government report showed on Thursday, suggesting the Federal Reserve (search) has little to fear from inflation pressures in the economy.

The consumer price index (search), the most widely used gauge of U.S. inflation, rose 0.2 percent after falling 0.2 percent in the previous month, the Labor Department (search) said.

The so-called core rate, which strips out volatile food and energy prices, rose 0.1 percent. Both measures matched Wall Street forecasts.

"Fundamentally, we know there is no inflation, and this confirms it. This is pretty much what we want to see," said David Wyss, chief economist Standard & Poor's Ratings Services, New York.

The closely watched core inflation rate has risen just 1.1 percent over the past 12 months, the slowest rate of advance since 1960.

Energy prices climbed 0.2 percent after falling 3.0 percent in November and food costs climbed 0.6 percent.

Clothing prices fell 0.4 percent and transportation prices declined 0.2 percent. Housing prices pushed higher, rising 0.3 percent, and medical care costs rose 0.6 percent.

The data is the third report on prices this week. Import prices data out on Tuesday and wholesale prices on Wednesday all indicated the U.S. central bank has room to leave interest rates at 45-year lows without worrying about inflation.

On Wednesday, Federal Reserve Board governor Ben Bernanke said monetary policy could be "patient" given the absence of inflationary pressure.

"Inflation is not even a remote risk in the U.S.," Bernanke said. "Because inflation is so low, monetary policy can afford to be patient to be sure that the recovery is sustained."

A separate report showed real earnings fell 0.6 percent in December, after a 0.6 percent rise in November.