WASHINGTON – U.S. consumer prices inched up as expected in November as falling costs for energy and clothing helped offset increases for medical care and food, the government said Tuesday in a report that showed inflation well contained.
The Consumer Price Index, the main U.S. inflation gauge, rose by 0.1 percent in November after advancing 0.3 percent in October. The so-called core CPI, which excludes volatile food and energy prices, rose 0.2 percent, the same as in October.
The rise in both the overall and core indices matched the expectations of economists on Wall Street.
"We're just continuing to see tame inflation," said Jim O'Sullivan, senior economist at UBS Warburg in Stamford, Connecticut. "You're not seeing deflation but you're certainly seeing very tame inflation."
Energy prices, which had risen for four straight months, declined 0.2 percent last month, pulled lower by a 0.4 percent drop in the cost of gasoline. Food prices rose 0.2 percent.
Over the last 12 months, the CPI has advanced by a modest 2.2 percent, while the core has risen only 2.0 percent, its smallest since the 12 months ended January 2000.
The report showed a sharp 0.4 percent drop in clothing prices in November and a 0.8 percent plunge in airline fares. In addition, new car prices edged down 0.1 percent.
However, medical care costs, which have been rising steeply, gained 0.6 percent last month and housing costs rose 0.2 percent.
Overall, the report underscored the lack of inflation in the U.S. economy.
Low inflation has given the Federal Reserve leeway to act aggressively to try to spur the economy with rate cuts.
Fed officials cut short-term interest rates an aggressive half-percentage point in early November as a form of insurance to make certain prices do not begin to drop, according to minutes of that policymaking session released last week.
At its most recent meeting last week, the Fed held the benchmark federal funds rate steady at a four-decade low of 1.25 percent.
While most economists discount the risk of deflation — a potentially debilitating decline in broad measures of consumer prices — a persistent drop in goods prices has raised concern.
The CPI report showed so-called core goods prices, which exclude energy and food commodities, fell 0.3 percent in November to push its 12-month decline to 1.6 percent from the 1.2 percent registered in October.
Still, the surprisingly steep drop has been more than offset by the rising cost of services. Service prices rose 0.3 percent last month for a 12-month gain of 3.5 percent.