WASHINGTON - U.S. consumer prices recorded their largest increase in six months in December as gasoline prices rebounded, but there was little to suggest a broader pick-up in prices with underlying inflation muted.
The Labor Department said on Thursday its Consumer Price Index increased 0.3 percent after being flat in November. In the 12 months to December, consumer prices accelerated 1.5 percent after advancing 1.2 percent in November.
The increases were in line with economists' expectations.
Stripping out the volatile energy and food components, the so-called core CPI rose only 0.1 percent, slowing from a 0.2 percent gain in November.
That left its increase over the past 12 months at 1.7 percent, where it has now been for four consecutive months.
The Fed targets 2 percent inflation, although it tracks a gauge that tends to run a bit below CPI.
The U.S. central bank has started reducing the pace of its monthly bond purchases, but persistently low inflation is expected to see it hold interest rates near zero for a long time even if the jobs market picks up significantly.
Slack in the jobs market, which has seen small gains in wages, is keeping the lid on inflation. Even as the economy accelerates, wage growth is expected to lag, meaning inflation will only gradually increase this year.
A 3.1 percent increase in gasoline prices was mostly behind the spike in inflation last month. The increase in gasoline was the largest since June and followed a 1.6 percent fall in November. Food prices nudged up 0.1 percent, rising by the same margin for a third month.
Within the core CPI, apparel prices rose 0.9 percent, also the largest gain since June. Apparel prices had declined for three consecutive months.
There were increases in rents. While medical care costs rose 0.3 percent, prices for prescription drugs fell 0.9 percent. Tobacco prices rose, maintaining the trend seen in wholesale prices.
New motor vehicle prices were flat, while prices for used cars and trucks fell.