Underlying inflation pressures rose in November even as renewed weakness in gasoline prices kept overall U.S. consumer prices in check, which could give the Federal Reserve more ammunition to raise interest rates on Wednesday.
The Labor Department said on Tuesday its so-called core Consumer Price Index, which excludes food and energy, increased 0.2 percent last month. It was the third straight month that the core CPI increased by 0.2 percent.
In the 12 months through November, the core CPI rose 2.0 percent, the largest gain since May 2014, after rising 1.9 percent in October.
The increase in core CPI reflected steady gains in the cost of rents, airline fares, new motor vehicles and medical care. They were, however, offset by falling gasoline prices, leaving the overall CPI unchanged last month after a 0.2 percent increase in October.
In the 12 months through November, the CPI increased 0.5 percent, the largest gain since last December, after rising 0.2 percent in October. The Fed targets 2 percent inflation and it tracks an index that is running far below the core CPI.
The report was released just hours before Fed officials were due to gather for a two-day meeting. The U.S. central bank is expected to lift its benchmark overnight interest rate from near zero at the end of the meeting on Wednesday, encouraged by tightening labor market conditions.
The Fed has not raised rates since June 2006.
Within the core CPI, the rental index increased 0.2 percent after rising 0.3 percent in October. The rent index was up 3.6 percent in the 12 months through November, reflecting rising demand for rental accommodation as more Americans shun homeownership.
Medical care costs increased 0.4 percent. The cost of doctor visits increased 1.1 percent, while prescription drug prices advanced 0.4 percent. Hospital costs, however, fell 0.2 after rising in October.
A strong dollar, as well as an inventory glut is keeping price increases for some core goods in check. Apparel prices fell 0.3 percent, declining for a third straight month. Prices for new motor vehicles edged up 0.1 percent.
Airline fares shot up 1.2 percent and tobacco prices rose 0.5 percent.
In November, energy prices fell 1.3 percent, with gasoline prices dropping 2.4 percent after rising 0.4 percent in October. The cost of electricity, however, increased 0.3 percent.
Food prices dipped 0.1 percent after gaining 0.1 percent in the prior month.
© 2022 Thomson/Reuters. All rights reserved.