U.S. consumer prices increased by the most in nine months in October amid gains in the cost of gasoline and rents, pointing to steadily rising inflation that likely will keep the Federal Reserve on track to raise interest rates again next month.
Consumer prices climbed 0.3 percent in October, with higher prices for gasoline, used autos and housing contributing to the increase.
The Labor Department said Wednesday that this measure of inflation has jumped 2.5 percent over the past 12 months. Adjusted for rising prices, average weekly wages have improved 0.9 percent this year. That's an increase of $8.52 in weekly earnings from October 2017.
Inflation pressures are building, partly driven by the lowest unemployment rate in nearly 49 years and strong domestic demand. Annual wage growth recorded its largest increase in 9-1/2 years in October.
The Federal Reserve targets inflation at 2 percent, just enough to encourage consumer spending and economic growth without leading to price increases that could destabilize the economy. Fed officials are expected at an upcoming meeting in December to raise a key short-term interest rate for the fourth time this year, in hopes of keeping inflation and check and preventing economic growth from overheating in ways that could trigger a downturn.
But inflation could be tamer in future months because oil prices have been trending lower and the value of the dollar has strengthened.
Core inflation, which excludes volatile energy and food costs, rose 0.2 percent in October. This core figure, which many economists consider to be a better indicator of underlying inflation, has risen 2.1 percent from a year ago.
Gas prices increased 3 percent in October, after having dipped 0.2 percent in September.
Housing — the single largest component of the index — increased 0.3 percent in October. Used car and truck prices jumped 2.6 percent on a monthly basis. But food prices slipped as fruits, vegetables, cereals and bakery products became cheaper.
© Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.