WASHINGTON – The cost of living in the U.S. excluding food and fuel increased in January by the most in more than four years, reflecting broad-based gains that signal companies may be getting some pricing power.
The so-called core consumer-price measure climbed 0.3 percent, more than forecast and the most since August 2011, after a 0.2 percent gain the month before, a Labor Department report showed Friday in Washington. Total prices were little changed, depressed by the continued plunge in energy costs.
A tightening labor market and nascent signs of wage growth bode well for domestic demand, a rebound in which could help stoke inflation if energy costs stabilize. The increase in inflation will likely hearten Federal Reserve policy makers, who are monitoring the U.S. economy’s durability against headwinds such as stock-market turmoil and weaker foreign markets.
“Over time, if the economy is growing above trend and the labor market is tightening, you should expect a gradual upward movement in inflation,” Stephen Stanley, chief economist at Amherst Pierpont Securities LLC in New York, said before the report. “It certainly hasn’t been dramatic yet, but we’re starting to see the first little bit of that.”
Total consumer prices were expected to drop 0.1 percent in January from the month before based on the median of 82 economists in a Bloomberg survey. Estimates ranged from a 0.2 percent decline to a 0.1 percent increase.
In the 12 months ended January, the overall consumer price measure increased 1.4 percent after a 0.7 percent increase in the prior period.
The core index advanced 2.2 percent from a year earlier, the most since June 2012.
Core index
The core gauge was projected by the Bloomberg survey to rise 0.2 percent in January from the previous month.
Prices for rent, clothing, medical care and new and used cars all advanced.
The CPI is the broadest of three price gauges from the Labor Department because it includes all goods and services. About 60 percent of the index covers prices consumers pay for services from medical visits to airline fares, movie tickets and rents.
The Labor Department’s gauge of wholesale prices, which includes 75 percent of all U.S. goods and services, unexpectedly climbed 0.1 percent in January from the month before on the back of higher food costs. A separate report last week indicated the cost of imported goods fell 1.1 percent for a second month.
