WASHINGTON: US consumer prices were unchanged in November but underlying inflation hit the Federal Reserve's target, government data showed Tuesday.
The Labor Department reported its consumer price index was flat in November, matching analyst expectations, after a 0.2 percent rise in October.
Stripping out volatile food and energy prices, core CPI rose 0.2 percent for the third month in a row, driven by higher rents and health care prices.
Year-over-year, core prices were up 2.0 percent, their largest increase since May 2014.
While that reading matched the Fed's 2.0 percent inflation target, the central bank prefers another measure, the core personal consumption expenditures price index, which has only risen 1.3 percent over the past year.
Overall inflation was curbed by a 1.3 percent drop in energy prices. Gasoline prices tumbled 2.4 percent.
Food prices eased 0.1 percent, their first decline since March, as prices on every major food group in grocery stores fell, except for fruits and vegetables.
But, underpinning the stronger gains in core inflation, rents increased 0.2 percent and medical care 0.4 percent. Airline fares rose 1.2 percent, slowing slightly from a 1.5 percent increase in October.
The fresh data on inflation came as the Fed's Federal Open Market Committee begins a two-day monetary policy meeting widely expected to deliver the first increase in interest rates in more than nine years.
Extremely weak inflation has been a key reason why many in the FOMC have resisted raising rates from near zero, arguing that there is time to wait before liftoff.
"Services, including rents, account for some 75 percent of the core index, and we expect year on year core inflation to rise to 2.2 percent by February, before leveling off for a few months," said Ian Shepherdson of Pantheon Macroeconomics in a note.
"Still, that's a clear increase from this year's lows."
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