U.S. consumer prices were flat in November as Americans paid less for cars and gasoline, while the 12-month inflation reading fell for the second straight month, which could give the Federal Reserve more room to help a still-weak economy.
The Labor Department said on Friday the consumer price index was unchanged last month. Economists had expected an increase of 0.1 per cent after a drop of 0.1 per cent in October.
Prices rose 3.4 per cent in the 12 months through November.
That is off from the 3-year high of 3.9 per cent clocked in September, and Friday’s report backs the view that the spike in inflation is subsiding.
Economists and investors see inflation cooling over the coming months, which could help convince the Federal Reserve to do more to bring down the country’s 8.6 per cent unemployment rate.
Earlier in the week, the Fed warned that turmoil in Europe presents a big risk to the U.S. economy, and policy makers left the door open to possible further steps to boost growth.
Fed officials are divided among those who think high unemployment and sluggish growth require more action and those who view the central bank’s already-aggressive efforts as bordering dangerously on an invitation to inflation.
Most economists have said the Fed’s next meeting on Jan. 24-25 would be the more likely occasion for any new moves to add to the U.S. central bank’s already extraordinary push to bring down borrowing costs and help growth.
Food prices rose 0.1 per cent, while gasoline fell 2.4 per cent.
Outside food and energy, prices climbed 0.2 per cent in November.
In a sign that could give pause to policy makers still concerned about inflation, core prices rose 2.2 per cent in the 12 months through November, up from 2.1 per cent in October.
The U.S. central bank has held overnight interest rates near zero since December, 2008, and has bought $2.3-trillion in government and mortgage-related bonds in a further attempt to stimulate a robust recovery.