The cost of living in the U.S. climbed in December by the most in six months, led by gains in fuel and rents that indicate inflation is making progress in moving toward the Federal Reserve’s goal.
The 0.3 percent gain in the consumer-price index was the biggest since June and followed no change the prior month, a Labor Department report showed today in Washington. It matched the median forecast of 87 economists surveyed by Bloomberg. The core measure, which excludes food and fuel, rose 0.1 percent, restrained by a record decrease in medical commodities including prescription drugs.
Growing demand rental housing and clothing gives companies more pricing power and signals the Fed is succeeding in stemming disinflation. That will make it easier for policy makers to keep reducing the pace of monthly asset purchases as the economy strengthens.
A rise in inflation is to be expected because “we’re already at very low levels, and unemployment has been falling,” said Michelle Meyer, senior U.S. economist at Bank of America Merrill Lynch in New York, speaking before the report. “Our forecast is that it’s a very slow-moving process.”
Estimates for the consumer-price index ranged from unchanged to a gain of 0.4 percent, according to the Bloomberg survey. They projected the core gauge would increase 0.1 percent.
Consumer prices rose 1.5 percent in 2013, the smallest calendar year gain in three years, after a 1.7 percent year- over-year advance in 2012. The core CPI climbed 1.7 percent over the past 12 months, also the smallest annual increase since 2010.
Another report today showed fewer Americans filed applications for unemployment benefits last week, a sign the labor market continues to strengthen.
Jobless claims decreased by 2,000 to 326,000 in the week ended Jan. 11, the least since the end of November, from a revised 328,000 in the prior period, according to Labor Department figures. The median forecast of 51 economists surveyed by Bloomberg called for 328,000.
Stock-index futures held earlier losses after the reports. The contract on the Standard & Poor’s 500 Index maturing in March dropped 0.2 percent to 1,837.9 at 8:32 a.m. in New York.