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Consumer prices rose 0.2% in October

Consumer prices edged up in October after two straight months of declines as gasoline costs moved higher. The report from the Labor Department could help provide the Federal Reserve more evidence that low inflation is stabilizing as it considers raising interest rates next month for the first time in nearly a decade.635525484466911536-AP-Consumer-Spending-001

The consumer price index rose 0.2%, the Labor Department said Tuesday, in line with economists’ estimates. Over the past year, prices are up 0.2%. . Excluding volatile food and energy items, so-called core prices also increased 0.2%, matching estimates. Core prices are up 1.9% the past year. Gasoline prices increased 0.4% last month after tumbling the two previous months. Food inflation moderated as prices ticked up 0.1%.

Rents continued to increase, rising 0.3%. And medical care costs jumped 0.8%, while airline fares increased 1.5% after falling recently. The increases more than offset a 0.8% drop in apparel prices and a 0.2% decline in new vehicle prices. Inflation has remained weak this year, largely because of low oil prices and a strong dollar that makes imports cheap for US consumers. Fed officials have said they believe those effects are transitory and inflation should drift up toward the central bank’s annual 2% target over the next year or so. Yet even core inflation has hovered below the Fed’s goal.

While low prices put more spending money in consumer’s pockets, persistently sluggish inflation can signal a weak economy and lead shoppers to put off purchases, dampening economic growth. “October’s inflation numbers are just the sort of confirmation the Fed is looking for that domestic strength is generating inflationary pressures,” economist Leslie Preston of TD Economics wrote in a note to clients.