Consumer prices in U.S. rise for fifth month on shelter, fuel

WASHINGTON – The cost of living in the U.S. 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 percent in December, matching the median projection of economists, after a 0.2 percent gain the previous month, Labor Department figures showed Wednesday in Washington. Prices were up 2.1 percent from a year earlier, the most since June 2014. Excluding volatile food and fuel, the so-called core measure rose 0.2 percent from November.

With energy costs 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, further boosting inflation and strengthening the case for the Fed to keep raising interest rates this year.

“Consumer prices have trekked higher over the past few months on the back of higher energy prices,” Sam Bullard, senior economist at Wells Fargo Securities LLC in Charlotte, N.C., said in a note before the report. The Fed is “well-positioned for multiple rate hikes in 2017” with inflation near target and unemployment below 5 percent, he wrote.

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Bloomberg survey estimates for the consumer price index ranged from gains of 0.2 percent to 0.5 percent.

The year-over-year rise in the consumer price gauge followed a 1.7 percent advance the prior month.

The core CPI measure increased 2.2 percent from December 2015, after rising 2.1 percent in the prior 12-month period. Both 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 percent in November from a year earlier; it hasn’t matched the central bank’s 2 percent goal since April 2012. Policy makers will next meet Jan. 31-Feb. 1.

Energy costs increased 1.5 percent from a month earlier, as gasoline rose 3 percent, the CPI report showed. Food prices were unchanged for a sixth month.

Expenses for shelter climbed 0.3 percent, reflecting a similar gain in owners-equivalent rent, one of the categories designed to track rental prices.

Airfares increased 1.9 percent, the most since June 2015. Americans paid 0.1 percent more for new automobiles, while used-car prices rose 0.5 percent, the biggest jump since April 2015. Clothing prices declined 0.7 percent, 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 percent of the index covers prices consumers pay for services from medical visits to airline fares, movie tickets and rents.

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