Consumer prices rise for first time in three months, a positive inflation sign for the Fed
Thanksgiving turkeys are shown at a Cub Foods store in Bloomington, Minn. Consumer prices have risen for the first time in three months, a positive inflation sign for the Fed.
Consumer prices rose last month for the first time since July, an inflation signal that could help push the Federal Reserve to increase a key interest rate.
The consumer price index increased 0.2% in October after a 0.2% decline the previous month, the Labor Department said Tuesday. The rise, driven by higher food and energy prices, was in line with economists’ expectations.
So-called core inflation, which excludes volatile food and energy prices, also rose 0.2%, matching September’s increase. Higher prices for housing and medical care, as well as for recreation, airline fares, alcohol and tobacco, pushed up core prices, the Labor Department said.
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For the year ended Oct. 30, overall prices were up 0.2% and core prices were up 1.9%. It was the second straight month that annual core prices were near the Fed’s target of 2%, although the central bank uses a different inflation measure that has been running lower.
The signs of growing inflation following the recent upbeat jobs report could lead Fed policymakers to raise their benchmark short-term interest rate next month. The rate has been near zero since late 2008.
Fed Chairwoman Janet L. Yellen has said a rate hike at the central bank’s December meeting is possible if the economy continues to improve.
Though the unemployment rate is down to 5%, near what the Fed considers full employment, inflation has been running well below its annual target. The steep drop in oil prices has been a major factor in the low inflation over the past year.
But energy prices, which declined in August and September, were up 0.3% last month, the Labor Department said.
Food prices rose 0.1% in October, but that was down from a 0.4% increase the previous month.
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