U.S. consumer prices moderated in November, but the underlying trend continued to point to firming inflation pressures amid rising rents, which could support more interest rate increases from the Federal Reserve next year.
The Labor Department said on Thursday its Consumer Price Index rose 0.2 percent last month as gasoline price increases slowed and food costs remained soft. The CPI advanced 0.4 percent in October.
In the 12 months through November, the CPI increased 1.7 percent, the biggest year-on-year gain since October 2014. The CPI rose 1.6 percent in the year to October.
Economists polled by Reuters had forecast the CPI rising 0.2 percent last month and climbing to 1.7 percent from a year ago.
The so-called core CPI, which strips out food and energy costs, rose 0.2 percent last month after edging up 0.1 percent in October. Rents accounted for most of the increase in the core CPI last month. Despite the increase, the year-on-year increase in the core CPI was unchanged at 2.1 percent.
The Fed on Wednesday raised its benchmark overnight interest rate by 25 basis points to a range of 0.50 percent to 0.75 percent, in what Chair Janet Yellen said was "a vote of confidence in the economy."
The U.S. central bank forecast three rate hikes in 2017 in anticipation of U.S. President-elect Donald Trump's expansionary fiscal policy agenda aimed at boosting growth through infrastructure spending and tax cuts.
The Fed has a 2 percent inflation target and tracks an inflation measure which is currently at 1.7 percent.
The central bank noted that inflation had increased since "earlier this year" and expected it to rise to its target "over the next couple of years." Trump's proposed fiscal policy would come when the economy is at full employment and fans inflation.
Last month, gasoline prices rose 2.7 percent after jumping 7.0 percent in October. Food prices were unchanged for a fifth straight month. Food consumed at home declined for a seventh consecutive month.
Within the core CPI basket, housing continued its upward march in November. Rents increased 0.3 percent last month, with owners' equivalent rent of primary residence also gaining 0.3 percent after a similar rise in October.
The cost of medical care services rose 0.2 percent after being unchanged for two straight months. The cost of doctor visits increased 0.6 percent, while prices for prescription medicine fell 0.6 percent. The cost of hospital services slipped 0.1 percent.
There were increases in the prices of a range of other goods last month including used cars and trucks, which rose for the first time since February. The cost of motor vehicle insurance increased 1.0 percent.