(Bloomberg) -- A measure of prices paid by U.S. consumers rose in November by more than forecast as costs of hotel stays, airfares and apparel jumped, though inflationary pressures elsewhere remained subdued as the pandemic continues to curb activity.
The consumer price index rose 0.2% from the prior month after no change in October, Labor Department data showed Thursday. Compared with a year earlier, the gauge rose 1.2%. The core index, which excludes volatile food and energy costs, also advanced 0.2% from the prior month and increased 1.6% from a year earlier.
The median forecast in a Bloomberg survey of economists called for a 0.1% gain in both the CPI and core measure.
While services costs picked up last month by the most since July, a broadening of inflation will likely take time as the nation awaits the distribution of Covid-19 vaccines. Currently, merchants have limited leeway to charge customers more as unemployment remains elevated and a surge in infections prompts some states and cities to reimpose restrictions on business.
The report showed the cost of transportation services jumped 1.8%, the most in four months. Airfares rose 3.5% after a 6.3% increase a month earlier, and motor vehicle insurance advanced 1.1% in November. Lodging away from home was 3.9% more expensive than in October, the largest gain since 2005.
Shelter Costs
But many economists caution against expectations of a longer-lasting acceleration in inflation, in large part because unemployment is expected to remain elevated throughout the year. Shelter costs, which include rents and make up about a third of the CPI, are also expected to remain subdued. Measures of rents and owners equivalent rent were unchanged for the first time since 2010.
Goods prices, meantime, were also unchanged in November from a month earlier. Clothing costs climbed 0.9%, while prices of used cars and new vehicles declined.
Tame inflation has been a hallmark of the pandemic, as the coronavirus has curbed demand for services, which make up about 60% of the overall CPI and 75% of the core measure. Market participants are increasingly projecting prices to pick up next year as demand increases for those industries most impacted by the coronavirus.
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Inflation has been consistently running below the Federal Reserve's 2% goal, which is measured by the Commerce Department's personal consumption expenditures price index. The softness helps explain ultra-easy monetary policy from the Fed, which has signaled it plans to keep interest rates near zero through 2023.
Forecasters surveyed by Bloomberg generally expect inflation to temporarily rise above 2% in the second quarter of 2021 on an annual basis before settling back at or slightly below that level.
A separate Labor Department report on Thursday showed applications for state unemployment benefits increased in the week ended Dec. 5. While the figure may reflect volatility around the Thanksgiving holiday, it also indicates that more business shutdowns amid a spike in infections are playing a role.
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