US consumer prices increase more than expected in November

Reuters

Posted at Dec 11 2019 09:48 PM


WASHINGTON - US 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 percent last month as households paid more for gasoline. The CPI advanced 0.4 percent in October. In the 12 months through November, the CPI rose 2.1 percent after gaining 1.8 percent in October.

Economists polled by Reuters had forecast the CPI climbing 0.2 percent in November and rising 2 percent on a year-on-year basis.

Excluding the volatile food and energy components, the CPI rose by 0.2 percent, matching October's increase. The so-called core CPI was up by an unrounded 0.2298 percent last month compared to 0.1572 percent 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 percent after a similar gain in October.

The Fed tracks the core personal consumption expenditures (PCE) price index for its 2 percent inflation target. The core PCE price index rose 1.6 percent 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 percent, 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 percent after rebounding 3.7 percent in October. Food prices edged up 0.1 percent, rising for a third straight month. Food consumed at home gained 0.1 percent.

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 percent after edging up 0.1 percent in October, which was the smallest gain since April 2011. It was lifted by a 1.1 percent rebound in the cost of hotel and motel accommodation after tumbling 3.8 percent in October.

Healthcare costs rose 0.3 percent in November after surging 1 percent in October, which was the most since August 2016. Apparel prices nudged up 0.1 percent last month after declining 1.8 percent 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 percent after rising 1.3 percent in October. 

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)