Rising U.S. Prices Support Fed Inflation View

American households paid much less to fill their cars’ fuel tanks in January while most other costs rose, supporting the Federal Reserve’s view that inflation will eventually approach its goal.

A plunge in energy pulled the consumer-price index down by 0.7 percent, the biggest decline since December 2008, a Labor Department report showed Thursday in Washington. Excluding food and fuel, which are often volatile, costs rose 0.2 percent, more than projected.

Fed officials, trying to ensure inflation isn’t too low, may take comfort in rising costs for rents, hotel stays and clothing that lessen the risk the plunge in oil will restrain prices throughout the economy. At the same time, cheaper fuel is freeing up money for consumers to spend elsewhere, helping to underpin growth.

Bloomberg