Reuters – US consumer prices accelerated in November amid a rebound in gasoline prices, but declining healthcare and apparel costs curbed underlying inflation pressures.
The Labour Department said on Wednesday its Consumer Price Index increased 0.4% last month after edging up 0.1% in October. That raised the year-on-year increase in the CPI back to 2.2% from 2% in October.
Last month’s increase in the CPI was in line with economists’ expectations. Excluding the volatile food and energy components, consumer prices ticked up 0.1% as prices for airline fares and household furnishing fell.
The so-called core CPI advanced 0.2% in October. As a result, the annual increase in the core CPI slowed to 1.7% in November from 1.8% in October.
The moderation in the core CPI will likely attract the attention of Federal Reserve officials when they resume a two-day policy meeting on Wednesday. Some Fed officials worry that factors that held down inflation in recent months could prove more persistent. But they could draw some comfort from a report on Tuesday showing a broad increase in producer prices in November.
The Fed’s preferred inflation measure, the personal consumption expenditures (PCE) price index excluding food and energy, has consistently undershot the US central bank’s 2% target for almost 5-1/2 years.
The Fed is expected to raise interest rates on Wednesday, encouraged by a tightening labour market and strengthening economy, which policymakers believe will boost inflation over time. The central bank has increased borrowing costs twice this year and has forecast three rate hikes in 2018.
Last month, gasoline prices rebounded 7.3% after falling 2.4% in October. Food prices were unchanged for a second straight month. The cost of rental accommodation rose 0.3%, matching the increase in October.
Owners’ equivalent rent of primary residence gained 0.2% after rising 0.3% in October. The cost of healthcare services slipped 0.1%, with prices for doctor visits falling 0.8%. Apparel prices dropped 1.3%, the largest drop since September 1998.