Cost of living in the US rises less than expected
The cost of living in the US rose less than forecast in November, indicating that higher prices for commodities such as fuel aren't filtering through into other goods and services.
The consumer-price index increased 0.1pc after a 0.2pc rise the prior month, the Labour Department said yesterday in Washington.
The median estimate of economists in a Bloomberg News survey called for a gain of 0.2pc. The so-called core measure, which excludes more volatile food and energy costs, also rose 0.1pc, matching the median forecast.
Retailers such as Target and Wal-Mart are discounting merchandise to stoke demand during the holiday shopping season as joblessness lingers near 10pc.
Limited inflation and a stagnant labour market underscore the Federal Reserve's decision on Tuesday to stay the course as it pursues record monetary stimulus.
"Inflation is a non-threat right now. There's a lot of slack in the economy," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania, who correctly forecast the rise in the CPI. "Inflation will remain very subdued and tepid over the next several months."
The measure of consumer prices was restrained by a second straight drop in new vehicle costs, cheaper household furnishings and a decline in natural gas. Airline fares rose by the most since June 2008.
Stock-index futures held losses stemming from concern that Europe's sovereign-debt crisis may derail the global economic recovery after Moody's Investors Service put Spain's credit rating on review for a possible downgrade.
The March contract on the Standard & Poor's 500 Index dropped 0.4pc to 1,232.5 at 8:42am in New York. The benchmark 10-year Treasury note rose, pushing down the yield to 3.43pc from 3.48pc late on Tuesday.
Estimates in the Bloomberg survey of 80 economists for the overall CPI ranged from no change to a gain of 0.3pc. The core rate rose for the first time since July.
In the 12 months ended in November, prices increased 1.1pc, matching the median projection in the Bloomberg survey.
The core rate increased 0.8pc in November from the same month last year, exceeding the median forecast for a 0.6pc gain.
Energy prices increased 0.2pc from a month earlier, reflecting gains in gasoline and fuel oil. Food prices also rose 0.2pc in November.
The ailing housing market is restraining the consumer price index. Rents, which account for about 40pc of core consumer prices, have been held in check as foreclosures push more houses into the rental market.
Owners-equivalent rent, one of the categories designed to track rental prices, rose 0.1pc for a second straight month. Compared with November 2009, owners-equivalent rent was up 0.2pc.
The cost of medical care increased 0.1pc last month.
New car prices declined 0.4pc, the most since January, Tobacco costs fell 0.1pc. Air fares increased 3pc in November. Apparel costs climbed 0.2pc in November and were down 0.8pc from the same month last year.