WASHINGTON • United States consumer prices last month rose at the fastest pace in nearly five years on an annual basis, reinforcing the view that inflation is in line with the Federal Reserve's goal.
The consumer price index (CPI) rose only 0.1 per cent over January, but jumped 2.7 per cent over the past 12 months, the largest year-on-year increase since March 2012, Labour Department figures showed yesterday.
The news came hours before the Fed was expected to raise interest rates at the conclusion of a two-day meeting yesterday, largely to stave off rising inflation. The median forecast in a Bloomberg survey called for no change.
The core CPI measure, which excludes volatile food and fuel costs, rose 0.2 per cent after a 0.3 per cent gain in the previous month. It increased 2.2 per cent from February last year.
The Fed's preferred gauge of inflation, which is the Commerce Department's personal consumption expenditures measure, climbed 1.9 per cent in January.
Energy costs decreased 1 per cent from a month earlier, the first decline since July last year and reflecting a 3 per cent drop in petrol, the Labour Department's report showed. Food prices rose 0.2 per cent, the biggest advance since September 2015.
The rise in the cost of living over the past year has meant little in the way of bigger pay cheques, a separate report from the Labour Department showed. Hourly earnings adjusted for inflation were unchanged from February last year.
In a separate report yesterday, US retail sales last month posted the smallest gain in six months, indicating a tempering of the consumer spending that has been carrying the economy.
Purchases rose 0.1 per cent, after a 0.6 per cent increase in the prior month that was stronger than previously reported, Commerce Department figures showed.
Mr Eugenio Aleman, senior economist at Wells Fargo Securities, said "confidence numbers are through the roof and if employment continues to grow, it's only going to strengthen the consumer".