A key measure of US inflation was little changed in January while the broader gauge slowed on lower energy costs, underscoring the Federal Reserve's recent decision to be patient on raising interest rates.
Excluding food and energy, the so-called core consumer price index rose 0.2% from the prior month and 2.2% from a year earlier, according to a Labor Department report on Wednesday.
The monthly pace matched the median estimate of economists. The broader CPI was unchanged from December, below forecasts, while the annual gain of 1.6% was the smallest since June 2017.
The data suggest inflation remains around the Fed’s 2% target, with prices getting a lift from steady wage gains. Fed officials have signaled a pause on raising rates amid global growth risks and headwinds from trade.
A separate Labor Department report on Wednesday illustrated how prices are affecting consumers: average hourly wages, adjusted for inflation, increased 1.7% in January from a year earlier, the biggest increase since mid-2016, reflecting the slowdown in the main inflation gauge.
Since raising rates in December for a fourth and final time in 2018, Chairman Jerome Powell and his colleagues at the central bank have pledged to be patient in deliberating another increase.
Powell signaled at his last press conference in late January that borrowing costs are unlikely to rise until inflation accelerates. “I would want to see a need for further rate increases, and for me, a big part of that would be inflation,” he said. “It wouldn’t be the only thing, but it would certainly be important.”
While policymakers projected two 2019 rate hikes at their December meeting, investors expect no moves for the whole year, according to pricing in rate futures. Economists see one interest-rate increase this year, cutting their estimates from as many as three more expected in November, according to a Bloomberg News survey this month.
The release of December data for the Fed’s preferred inflation gauge -- a separate measure tied to consumption -- was delayed by the government shutdown. The gauges tend to run slightly below the Labor Department’s CPI measures.
Wednesday’s CPI report had a few quirks, including a 1.1% rise in apparel prices that was the biggest in almost a year. Energy prices also had an outsize impact on the headline number with a 3.1% monthly drop that was the most in almost three years.
Economists had forecast a 0.2% gain in the monthly core gauge and a 2.1% annual advance.
The report showed new car prices rose 0.2% from the prior month for the first increase since July. Used car prices were up 0.1% after declining in December.
Apparel prices reflected outsize gains in footwear, which had the biggest increase since 1988, and women's clothing.
Gasoline prices fell 5.5% from the prior month and were down 10.1% from a year earlier.
Food costs climbed 0.2% and 1.6% annually.
Expenses for medical care rose 0.2% from the prior month; these readings often vary from results for this category within the Fed’s preferred measure of inflation due to different methodologies.
The CPI is the broadest of three price gauges from the Labor Department because it includes all goods and services. About 60% of the index covers the prices that consumers pay for services ranging from medical visits to airline fares, movie tickets, and rents.