Consumer Prices Increase for Fourth Consecutive Month
The cost of living in the U.S. rose for a fourth straight month, adding to signs that inflation is approaching the Federal Reserve’s goal.
The consumer-price index climbed 0.2% in November, matching the median estimate of economists, after a 0.4% gain the previous month, Labor Department figures showed Dec. 15 in Washington. Excluding volatile food and fuel, the so-called core measure also rose 0.2% from a month earlier.
Rising prices for housing and gasoline contributed to November’s rise in the CPI. A sustained acceleration in price gains would increase chances that Federal Reserve policymakers fulfill their forecast for three interest-rate increases in 2017 after they raised borrowing costs this week for the first time in a year, citing a boost in inflation expectations and a strengthening labor market.
“Inflation’s been firming for a little while,” said Gennadiy Goldberg, interest-rate strategist at TD Securities in New York. “Given what the Fed was saying yesterday about slack being diminished, this basically works in their favor.”
Bloomberg News survey estimates from analysts for the monthly change in the CPI ranged from unchanged to a gain of 0.3%.
The gauge increased 1.7% in the 12 months ended in November, the most in two years. That follows a 1.6% year-over-year advance the prior month.
The core CPI measure’s rise follows a 0.1% gain in the previous month. It increased 2.1% from November 2015, the same as in the 12 months through October. The median projections in the Bloomberg survey called for the core gauge to rise 0.2% from the previous month, and to climb 2.2% from the prior year.
Expenses for shelter climbed 0.3%, as owners-equivalent rent, one of the categories designed to track rental prices, also rose 0.3%. Energy costs increased 1.2% from a month earlier, the third straight gain, as gasoline rose 2.7%, the report showed. Food prices were unchanged for a fifth month.
Americans paid 0.1% less for new automobiles. Clothing prices fell 0.5%, the second decline in three months. Airfares decreased 1.3%.
Prices for medical care were unchanged. These readings often vary from results for this category within the Fed’s preferred measure of inflation — the core personal consumption expenditures deflator that’s tied to consumption. Economists attribute the discrepancy to different methodologies.
The CPI is the broadest of three price gauges from the Labor Department because it includes all goods and services. About 60% of the index covers prices consumers pay for services from medical visits to airline fares, movie tickets and rents.
The Fed targets 2% annual gains in the separate PCE price index from the Commerce Department. That gauge has firmed toward policymakers’ target this year, increasing by 1.4% in the 12 months through October.
A separate report from the Labor Department on Dec. 15 showed that average hourly earnings, adjusted for inflation, fell 0.4% in November, the biggest drop since February 2013. The gauge was up 0.8% from a year earlier.
