US inflation rate rises as Federal Reserve begins meeting

Yellen Image copyright AFP
Image caption Federal Open Market Committee members including Janet Yellen will meet to set interest rates

Underlying US inflation - excluding food and energy - rose in November, as the Federal Reserve meets to decide whether to raise interest rates.

The Labor Department said its core Consumer Price Index increased 2% last month. It was the third month that the core CPI increased by that much.

US prices including fuel and food were up 0.5% annually in November.

The US central bank's Federal Open Market Committee will on Tuesday begin a two day meeting to set rates.

It targets 2% inflation but uses the price index for personal consumption expenditures, or PCE index, which is running below the core CPI.

Still, the Fed is expected to raise its benchmark overnight interest rate from near zero at the end of the meeting on Wednesday, encouraged by a strengthening labour market.

CPI data showed that rent, airline fares, new motor vehicles and medical care all increased in price. Those gains were weighed down by low prices for petrol.

Earlier this month data from the Bureau of Labor Statistics suggested that US jobs growth remained solid in November as the economy added 211,000 jobs, slightly above expectations.

The data also showed the jobless rate held at its seven-and-a-half year low of 5%.

Those jobs stats showed that the construction, food services and retail sectors all saw healthy job increases.

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