[ WASHINGTON] Underlying inflation pressures rose in November even as renewed weakness in gasoline prices kept overall US 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 per cent last month. It was the third straight month that the core CPI increased by 0.2 per cent.
In the 12 months through November, the core CPI rose 2.0 per cent, the largest gain since May 2014, after rising 1.9 per cent 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 per cent increase in October.
In the 12 months through November, the CPI increased 0.5 per cent, the largest gain since last December, after rising 0.2 per cent in October. The Fed targets 2 per cent 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 US 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 per cent after rising 0.3 per cent in October. The rent index was up 3.6 per cent in the 12 months through November, reflecting rising demand for rental accommodation as more Americans shun homeownership.
Medical care costs increased 0.4 per cent. The cost of doctor visits increased 1.1 per cent, while prescription drug prices advanced 0.4 per cent. Hospital costs, however, fell 0.2 per cent 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 per cent, declining for a third straight month. Prices for new motor vehicles edged up 0.1 per cent.
Airline fares shot up 1.2 per cent and tobacco prices rose 0.5 per cent.
In November, energy prices fell 1.3 per cent, with gasoline prices dropping 2.4 per cent after rising 0.4 per cent in October. The cost of electricity, however, increased 0.3 per cent.
Food prices dipped 0.1 per cent after gaining 0.1 per cent in the prior month.