A dip in US gasoline prices held down consumer inflation last month, masking rising prices for food, rent and medical care, according to government data released Wednesday.
The Consumer Price Index (CPI) showed inflation momentum remained modest, removing some pressure on the Federal Reserve to continue raising interest rates.
The index, which tracks costs in household goods and services, was flat for November compared to October, its lowest reading since March. That matched economists’ forecasts and was a decline from the 0.3 percent increase in the prior month.
The unchanged reading was held down by a 4.2 percent drop in gasoline prices, which offset gains in the costs of electricity, natural gas, groceries and restaurants.
Compared to November of last year, CPI was up 2.2 percent, the slowest recorded pace since February.
Excluding the volatile food and fuel categories, the “core” index rose 0.2 for the second month in a row, reflecting higher costs for medical care, used autos and shelter. Prices for mobile telephone services, airfares and auto insurance fell.
The 12-month core reading moved a tenth higher, also to 2.2 percent — nudged higher by a record gain in prices for laundry equipment, which soared 15.5 percent.
President Donald Trump earlier this year put steep tariffs on imported washing machines.
Ian Shepherdson of Pantheon Macroeconomics said the increase in used car prices was a surprise but they were instead likely to fall in coming months.
“Accordingly, we remain of the view that near-term upside inflation risks are very limited, with core CPI inflation likely to dip a bit over the next few months,” he said in a client note.
“This does not mean the Fed can relax, though, because the tightening labor market is a real medium-term threat, and zero real short-term interest rates won’t ease the pressure.”
Markets did not appear moved by the figures, with Wall Street up substantially at Wednesday’s open on optimism in the US-China trade talks.
