U.S. consumer prices were flat in December and rose just 1.7% in 2012, the U.S. Labor Department announced Wednesday.

That 1.7% rise for all of 2012 is down from a 3.0% increase in 2011 -- and it means inflation at the retail level remains within the U.S. Federal Reserve's "comfort zone."

What's more, that modest inflation should allow the Fed to maintain both quantitative easing and low, short-term interest rates in an effort to boost the sluggish U.S. economy.

Also, core inflation, with excludes often-volatile food and energy prices, rose just 0.1% in December, and 1.9% in 2012.