Compared with a year earlier, consumer prices rose 1.6% in January, the smallest 12-month gain since July, today’s report showed. They climbed 1.7% in the 12 months ended December.
The 0.3% increase in the core reading was the biggest since May 2011 and followed a 0.1% gain in December. Economists projected a 0.2% pick-up. Core prices rose 1.9% for the year through January, the same as in December.
Energy costs decreased 1.7% from a month earlier, a third consecutive decrease, today’s report showed.
That will probably reverse this month as fuel expenses head higher. The average cost of a gallon of regular gasoline reached $3.78 a gallon as of yesterday, compared with an average $3.32 in January, according to data from the nation’s largest motoring club, AAA.
Food costs were also little changed in January, the first month without an increase in almost a year.
The core measure was pushed up by a 0.8% jump in clothing costs, the biggest gain since August 2011. Hotel rates and other lodging away from home climbed 1.2%, while the cost of airline fares increased 1.1%.
The restrained headline inflation readings helped boost take-home pay through January. Price-adjusted average hourly earnings for all workers increased 0.2% last month, a separate report from the Labor Department showed today. They climbed 0.6% over the past 12 months, the biggest year- to-year gain since November 2010.
Central bank policy makers have said they foresee inflation proceeding at a pace that will allow them to focus on reducing unemployment.
“Nearly all participants” in the Federal Open Market Committee’s Jan. 29-30 meeting on monetary policy “anticipated that inflation over the medium-term would run at or below the Committee’s 2% objective,” according to minutes released yesterday. “There was little evidence of wage or cost pressures outside of isolated sectors, and measures of inflation expectations remained stable.”