Consumer prices held steady in November, the Bureau of Labor Statistics reported Tuesday, bringing inflation on an annual basis up to 0.5 percent from 0.2 percent the month before.
The report was in line with investors’ expectations for inflation to slow to a standstill on an monthly basis, adjusted for seasonal fluctuations.
The underlying signs, however, point toward prices rising faster. That will reassure Chairwoman Janet Yellen and other officials at the Federal Reserve, who meet Tuesday morning in Washington, D.C., to discuss the possibility of tightening monetary policy and have been looking for confirmation of inflation rising toward the Fed’s 2 percent target.
Core inflation, a measure of price changes that strips out the volatile elements of energy and food, rose even higher in November to 2 percent. It’s been even higher in recent months.
Event at 2 percent as measured by the Consumer Price Index, inflation would still below the Fed’s 2 percent target, which is based on a different price index that runs slightly lower.
Nevertheless, Tuesday’s release will likely be interpreted by the Fed that the economy is headed toward full capacity, even as international events have slowed price increases.
Over the past year, the prices of services have rise nearly 3 percent. Over the same time, the prices of goods, including commodities that are more affected by slowing demand in China and elsewhere, is down 0.6 percent.
Shelter prices rose 3.2 percent over the past year, accounting for two-thirds of the overall rise in core inflation.
The year-over-year Consumer Price Index readings are likely to accelerate in December and January, as large monthly drops in December and January of last year fall out of the calculation.
