U.S. consumer prices were flat in November, weighed down by a drop in gas prices, although the broader trend of underlying inflation showed signs of firming amid rising services costs.
The consumer-price index, which measures what Americans pay for everything from breakfast cereal to college tuition, was unchanged in November after rising a seasonally adjusted 0.2% in October, the Labor Department said Tuesday. Excluding the volatile food and energy categories, so-called core prices rose 0.2%, the same pace of growth as in October and September.
Economists surveyed by the Wall Street Journal expected no change to consumer prices in November, and core prices to rise 0.2%.
Over the year, overall prices rose 0.5%, the largest 12-month increase since December 2014. Prices were largely held down over the past year by a 14.7% year-over-year decline in energy prices. Core prices were up 2% on the year, the largest 12-month increase since May 2014, driven by rising housing costs.
The reading shows inflation remains historically weak, held down largely by lower gas prices, and it comes as Federal Reserve policy makers prepare to meet in Washington on Tuesday and Wednesday. Central bank officials have been monitoring the inflation picture as they debate whether to begin raising interest rates for the first time since 2006.
As in previous months, lower oil prices weighed down inflation in November. Tuesday's report showed an index of energy prices fell 1.3% in November, led by a seasonally-adjusted 2.4% fall in gasoline costs. Over the past year gasoline prices have fallen 24.1%.
Other prices went down on the month, but were mostly higher on the year. The cost of food fell 0.1% in November and rose 1.3% on the year. Shelter prices have risen 3.2% over the year and the cost of services excluding energy services is up 2.9%. The Labor Department found Americans' inflation-adjusted weekly wages fell 0.2% in November, as hourly earnings rose but the number of hours worked declined.
Federal Reserve officials are looking for signs that inflation is picking up as they consider whether to raise interest rates, which have held near zero since 2008. Tuesday's report offers Fed officials more details on the current inflation picture as they head into their two-day policy meeting.
The Fed's preferred inflation gauge, the index of personal consumption expenditures, has not hit the central bank's 2% target in three and a half years. Fed Chairwoman Janet Yellen and other officials have said they are looking for inflation to pick up as a sign that the economy is finally strong enough to absorb higher interest rates.
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