Core US consumer prices rise by most in over four years

Business Friday 19/February/2016 18:22 PM
By: Times News Service
Core US consumer prices rise by most in over four years

Washington: The cost of living in the US excluding food and fuel increased in January by the most in more than four years, reflecting broad-based gains that signal companies may be getting some pricing power.
The so-called core consumer-price measure climbed 0.3 per cent, more than forecast and the most since August 2011, after a 0.2 per cent gain the month before, a Labour Department report showed on Friday in Washington. Total prices were little changed, depressed by the continued plunge in energy costs.
A tightening labour market and nascent signs of wage growth bode well for domestic demand, a rebound in which could help stoke inflation if energy costs stabilise. The increase in inflation will likely hearten Federal Reserve policy makers, who are monitoring the US economy’s durability against headwinds such as stock-market turmoil and weaker foreign markets.
“Prices are firming up, and it’s across a fairly nice breadth,” said Tom Porcelli, chief US economist at RBC Capital Markets LLC in New York. “If that doesn’t convince people that inflation is not dead, I don’t know what will.”
Total consumer prices were expected to drop 0.1 per cent in January from the month before based on the median of 82 economists in a Bloomberg survey. Estimates ranged from a 0.2 per cent decline to a 0.1 per cent increase.
In the 12 months ended January, the overall consumer price measure increased 1.4 per cent after a 0.7 per cent increase in the prior period.
The core index advanced 2.2 per cent from a year earlier, the most since June 2012.
The core gauge was projected by the Bloomberg survey to rise 0.2 per cent in January from the previous month.
Prices for rent, clothing, medical care and new and used cars all advanced.
The CPI is the broadest of three price gauges from the Labor Department because it includes all goods and services. About 60 per cent of the index covers prices consumers pay for services from medical visits to airline fares, movie tickets and rents.
The Labor Department’s gauge of wholesale prices, which includes 75 per cent of all US goods and services, unexpectedly climbed 0.1 per cent in January from the month before on the back of higher food costs. A separate report last week indicated the cost of imported goods fell 1.1 per cent for a second month.