U.S. consumer prices rose more than expected in November, which could further support the Federal Reserve’s intention not to cut interest rates again in the near term after reducing borrowing costs three times this year.
The Labor Department said on Wednesday its consumer price index increased 0.3% last month as households paid more for gasoline. The CPI advanced 0.4% in October. In the 12 months through November, the CPI rose 2.1% after gaining 1.8% in October.
Economists polled by Reuters had forecast the CPI climbing 0.2% in November and rising 2.0% on a year-on-year basis.
Excluding the volatile food and energy components, the CPI rose by 0.2%, matching October’s increase. The so-called core CPI was up by an unrounded 0.2298% last month compared to 0.1572% in October. It was lifted by gains in healthcare and prices of used cars and trucks, recreation and hotel and motel accommodation.
In the 12 months through November, the core CPI increased 2.3% after a similar gain in October.
The Fed tracks the core personal consumption expenditures (PCE) price index for its 2.0% inflation target. The core PCE price index rose 1.6% on a year-on-year basis in October and has undershot its target this year. November PCE price data will be published later this month.
Fed officials were due to conclude a two-day policy meeting later on Wednesday. The U.S. central bank is expected to keep rates on hold after reducing borrowing costs in October for the third time this year. It has signaled a pause in the easing cycle that started in July when it cut rates for the first time since 2008.
November’s firmer inflation readings followed a report last Friday showing the economy added a robust 266,000 jobs in November and the unemployment rate fell back to 3.5%, its lowest level in nearly half a century. Other data on housing, trade and manufacturing have also been relatively upbeat, and suggested the economy was growing at moderate speed rather than stalling. In November, gasoline prices rose 1.1% after rebounding 3.7% in October. Food prices edged up 0.1%, rising for a third straight month. Food consumed at home gained 0.1%.
Owners’ equivalent rent of primary residence, which is what a homeowner would pay to rent or receive from renting a home, increased 0.2% last month, matching October’s rise. The rent index gained 0.3% after edging up 0.1% in October, which was the smallest gain since April 2011. It was lifted by a 1.1% rebound in the cost of hotel and motel accommodation after tumbling 3.8% in October.
Healthcare costs rose 0.3% in November after surging 1.0% in October, which was the most since August 2016. Apparel prices nudged up 0.1% last month after declining 1.8% in October.
New vehicle prices fell for a fifth straight month, likely because of deep discounting by automakers trying to get rid of stocks of older models. Used motor vehicles and trucks prices increased 0.6% after rising 1.3% in October.