Consumer Prices Rise for Fifth Month on Shelter, Gas
The cost of living in the United States climbed for a fifth month on the back of shelter and fuel prices, pushing inflation closer to the Federal Reserve’s goal.
The consumer-price index rose 0.3% in December, matching the median projection of economists, after a 0.2% gain the previous month, Labor Department figures showed Jan. 18. Prices were up 2.1% from a year earlier, the most since June 2014. Excluding volatile food and fuel, the so-called core measure rose 0.2% from November.
With energy moving higher and rents and medical costs continuing to firm up, price pressures are gaining traction in the world’s largest economy. Steady demand would allow companies to regain pricing power, boosting inflation and strengthening the case for the Fed to keep raising interest rates this year.
“The overall narrative is, inflation is accelerating,” said Tom Simons, a senior economist at Jefferies in New York. “We’re seeing broad-based, modest increases in prices. The Fed is going to be pleased” with these numbers.
Bloomberg survey estimates for the consumer price index ranged from gains of 0.2% to 0.5%.
The year-over-year rise in the consumer price gauge followed a 1.7% advance the prior month.
The core CPI measure increased 2.2% from December 2015 after rising 2.1% in the prior 12-month period. The monthly and year-over-year gain matched the median forecasts of economists surveyed by Bloomberg.
The Fed’s preferred gauge of inflation, which is the Commerce Department’s personal consumption expenditures price measure, rose 1.4% in November from a year earlier; it hasn’t matched the central bank’s 2% goal since April 2012. Policymakers will next meet Jan. 31-Feb. 1.
Energy costs increased 1.5% from a month earlier as gasoline rose 3%, the CPI report showed. Food prices were unchanged for a sixth month.
Expenses for shelter climbed 0.3%, reflecting a similar gain in owners-equivalent rent, one of the categories designed to track rental prices.
Airfares increased 1.9%, the most since June 2015. Americans paid 0.1% more for new automobiles, while used-car prices rose 0.5%, the biggest jump since April 2015. Clothing prices declined 0.7%, the second straight drop.
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 rising cost of living cut into paychecks in December, a separate report from the Labor Department showed Jan. 18. Hourly earnings adjusted for inflation rose 0.1% from the prior month. They were up 0.8% over the past 12 months.
