Consumer prices rise on
higher gasoline, rent costs
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[January 18, 2017]
Jan 18 (Reuters) - U.S. consumer prices rose in December as households
paid more for gasoline and rental accommodation, leading to the largest
year-on-year increase in 2-1/2 years, a sign that inflation pressures
could be building.
The Labor Department said on Wednesday its Consumer Price Index rose 0.3
percent last month after gaining 0.2 percent in November. In the 12
months through October, the CPI increased 2.1 percent, the biggest
year-on-year gain since June 2014. The CPI rose 1.7 percent in the year
The increases were in line with economists' expectations.
The CPI rose 2.1 percent in 2016, up from 0.7 percent in 2015.
Rising inflation comes against the backdrop of a strengthening economy
and tightening labor market, which raises the specter of a faster pace
of interest rate increases from the Federal Reserve than currently
The U.S. central bank has forecast three rate hikes this year. It raised
its benchmark overnight interest rate by 25 basis points to a range of
0.50 percent to 0.75 percent last month.
Price pressures are likely to remain on an upward trend amid
expectations of fiscal stimulus from the incoming Trump administration.
Republican businessman-turned-politician Donald Trump, who will be sworn
in as U.S. president on Friday, has pledged to increase spending on
infrastructure and cut taxes.
The so-called core CPI, which strips out food and energy costs, rose 0.2
percent last month after the same increase in November. As a result, the
core CPI increased 2.2 percent in the 12 months through December, from
2.1 percent in November.
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A customer pushes a shopping cart at a Walmart store in Chicago,
Illinois, U.S. November 23, 2016. REUTERS/Kamil Krzaczynski
Fed has a 2 percent inflation target and tracks an inflation measure which is
currently at 1.6 percent.
Last month, gasoline prices surged 3.0 percent after climbing 2.7 percent in
November. Food prices were unchanged for a sixth straight month. The cost of
food consumed at home dropped for an eighth consecutive month.
Within the core CPI basket, housing continued its upward march in December.
Rents increased 0.3 percent last month, with owners' equivalent rent of primary
residence also gaining 0.3 percent after the same rise in November.
The cost of medical care rose 0.2 percent, with the prices for doctor visits
unchanged. Prices for prescription medicine increased 0.2 percent. The cost of
hospital services rose 0.3 percent.
There were increases in the prices of a range of other goods and services last
month including the cost of motor vehicle insurance, which increased 0.8
(Reporting by Lucia Mutikani; Editing by Paul Simao)
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