Consumer prices hold steady in November, but other inflation signs point toward Fed rate hike
A sign advertises a sale in a shopping district in lower Manhattan on Nov. 17.
Reporting from Washington — Consumer prices were unchanged in November amid declining energy and food costs, but other data in the government’s monthly report indicated enough inflation to keep the Federal Reserve on track for an interest rate hike this week.
Excluding volatile food and energy prices, the so-called core consumer price index rose 0.2%, the same as in the previous two months, the Labor Department said Tuesday.
For the year ended Nov. 30, core prices were up 2%. That was the largest 12-month increase since May 2014 and in line with the Fed’s annual 2% target.
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Fed policymakers have been worried about low inflation as they consider when to hike their benchmark short-term interest rate for the first time in nearly a decade.
Though there has been significant improvement in the labor market, sharply lower oil prices have kept inflation running well below the level the Fed believes is needed for healthy economic growth.
Energy prices rose 0.3% in October, the first increase in three months, helping push up the consumer price index by 0.2%.
But energy prices fell again in November, dropping 1.3%, and were down 14.7% over the previous 12 months. Gas prices decreased 24.1% during that same 12-month period.
Food prices declined 0.1% last month, the first decrease since March.
Still, consumer prices for the 12 months ended Nov. 30 were up 0.5%, the most since December 2014.
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Fed officials have said the downward inflation pressure caused by low energy prices should be temporary.
They use a different inflation measure based on personal consumption expenditures, which runs lower than the consumer price index. The latest figure was 1.3% core inflation for the year ended Oct. 31.
Fed policymakers begin a two-day meeting on Tuesday to consider hiking the federal funds rate, which has been near zero since December 2008 in an attempt to boost economic growth.
The Fed is widely expected to announce a 0.25-percentage-point increase on Wednesday.
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