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Getty Images Consumers are paying more for gas, rent and health care, but inflation is still fairly low.
The numbers: U.S. households paid more for energy, health care and rent in November, pushing the rate of inflation up to the highest level in a year.
The consumer price index rose 0.3% last month following an even bigger increase in October, the government said Wednesday. Economists polled by MarketWatch had forecast a 0.2% advance.
The recent spike lifted the increase in the cost of living over the past 12 months to 2.1% from 1.8%. That’s the highest level since November 2018.
Yet even though consumer prices have been bubbling up, inflation in the U.S. is still low by historical standards.
What happened: Gasoline prices actually fell in November, but not as much as they normally do. As a result, the government’s seasonal adjustments showed a 1.1% increase.
The cost of rent and medical care both increased again, up 0.3% each. Prices also rose slightly for food, clothes, education and used vehicles.
Prices for new cars and trucks fell for the fifth month in a row. Airfares also declined.
Meanwhile, another closely watched measure of inflation that strips out food and energy rose 0.2% last month. The yearly increase in the so-called core rate was unchanged at 2.3%.
Real or inflation-adjusted hourly wages were flat in November. They’ve risen a modest 1.1% in the past year.
Big picture: The pace of consumer inflation softened earlier this year after touching a six-year peak of 2.9% in mid-2018, giving the Federal Reserve the leeway to cut interest rates to shore up the economy amid a tense trade dispute with China.
Consumer prices could continue to creep higher if the economy speeds up, but the Fed doesn’t expect inflation to sharply exceed its 2% goal anytime soon.
The Fed’s preferred inflation gauge known as the PCE is also significantly weaker. The PCE index rose just 1.3% in the 12 months ended in October.
Even if prices rise faster than expected, the central bank is prepared to let inflation hover above 2% for a while after years of undershooting its target. The Fed is expected to leave interest rates unchanged on Wednesday after its latest meeting to evaluate the economy.
Market reaction: The Dow Jones Industrial Average DJIA, -0.10% and S&P 500 SPX, -0.11% were set to open with little movement in Wednesday trades. Investors are watching closely to see if the U.S. and China complete what they are calling “phase one” of a broader trade compromise.
The 10-year Treasury yield TMUBMUSD10Y, -0.89% slipped to 1.82%.
