U.S. consumer prices rose modestly last month, weighed down by falling gasoline prices.
The Labor Department said Thursday that its consumer price index blipped up 0.1% in January after rising 0.2% in December. Over the past year, consumer inflation is up 2.5%, biggest gain since October 2018.
Excluding volatile food and energy prices, so-called core consumer inflation rose 0.2% in January and 2.3% over the past year. Gasoline prices dropped 1.6% in January after surging 3.1% in December. They are up 12.8% over the past year.
Consumer inflation is running close to the Federal Reserve’s 2% annual target.
The Fed last year cut its benchmark interest rate three times to the current historically low range of 1.5% to 1.75%. The cuts were partly meant to protect a record-breaking economic expansion from the fallout from President Donald Trump’s trade war with China.
The central bank has called the current rates “appropriate to support sustained expansion of economic activity” and a strong labor market.
Workers’ inflation-adjusted hourly earnings rose 0.1% in January after falling 0.1% in December. Their real hourly earnings are up 0.6% over the past year. But because they worked fewer hours, their weekly inflation-adjusted earnings showed “essentially no change’’ over the past year, the Labor Department said.
Food prices posted an annual increase of 1.8% on a 3.1% jump in restaurant prices. New car prices were up 0.1% over the past year; used car prices dropped 2%. Medical care prices rose 5.1% from January 2019.