US consumer prices increase, but core CPI moderates
WASHINGTON: US consumer prices accelerated in November amid a rebound in gasoline prices, but declining healthcare and apparel costs curbed underlying inflation pressures. The Labor Department said yesterday its Consumer Price Index increased 0.4 percent last month after edging up 0.1 percent in October. That raised the year-on-year increase in the CPI back to 2.2 percent from 2.0 percent 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 percent as prices for airline fares and household furnishing fell.
The so-called core CPI advanced 0.2 percent in October. As a result, the annual increase in the core CPI slowed to 1.7 percent in November from 1.8 percent 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 yesterday. 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 percent target for almost 5-1/2 years.
The Fed is expected to raise interest rates yesterday, encouraged by a tightening labor 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 percent after falling 2.4 percent in October. Food prices were unchanged for a second straight month. The cost of rental accommodation rose 0.3 percent, matching the increase in October. Owners’ equivalent rent of primary residence gained 0.2 percent after rising 0.3 percent in October. The cost of healthcare services slipped 0.1 percent, with prices for doctor visits falling 0.8 percent. Apparel prices dropped 1.3 percent, the largest drop since September 1998. — Reuters