Inflation continued to firm up in November thanks to rising rents and gas prices, the Bureau of Labor Statistics reported Thursday.
The Bureau’s Consumer Price Index showed annual inflation rising to 1.7 percent annually on a 0.2 percent monthly increase in November, right in line with forecasters’ expectations.
Core inflation, which strips out volatile energy and food prices to present a less noisy indicator of price changes, held steady at 2.1 percent annually.
Rising inflation is in line with the Federal Reserve’s forecast, which is based on the idea that the economy is steadily nearing a full cyclical recovery, bringing workers back into jobs and providing them wage increases and employing underutilized resources.
Rents have been driving inflation recently. Costs for shelter, which account for about a third of the overall index, were up 0.3 percent on the month and are up 3.6 percent annually.
More recently, energy prices have perked up after falling steeply in recent years as the price of oil plummeted, dragging down headline U.S. inflation to near zero or below for much of 2015. Overall energy prices are up 1.4 percent annually, the most since July 2014, reflecting big gas price increases in the past two months.
Those gains offset falling food prices. The overall food index hasn’t budged in five straight months, while food at home has declined for seven straight months and is down 2.2 percent on the year. Meats, poultry, fish, and eggs have dropped in price by 6 percent in that time.
While the Fed hopes for rising prices as a sign that their easy-money policies are stoking a faster recovery, the story is different for consumers. Over the past few years, stagnant consumer prices have meant that workers’ earnings went further at the store, at the pump, and in the majority of purchases. If inflation is indeed rising, faster wage gains will be needed to boost real purchasing power.
