WASHINGTON — Low oil costs kept consumer prices unchanged in January, but core inflation — which excludes volatile energy and food prices — posted its biggest monthly increase since 2011, the Labor Department said Friday.
The report indicates that when falling oil prices stabilize, inflation could be poised to move back toward the Federal Reserve’s annual target of 2 percent. Such a move could lead to additional increases in the Fed’s benchmark short-term interest rate.
Core consumer prices increased 0.3 percent in January, an improvement over 0.2 percent the previous month.
For the 12 months that ended Jan. 31, core prices rose 2.2 percent. That was the biggest increase since June 2012.
“In one line: Core inflation is taking off,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
Still, overall consumer prices were flat in January as lower energy costs offset increases for other goods and services.
Prices for apparel increased 0.6 percent, medical care 0.4 percent and new vehicles and food at restaurants 0.3 percent each. But energy prices were down 2.8 percent in January, including a 4.8 percent decline in gas prices.
For the 12 months that ended Jan. 31, overall prices increased 1.4 percent. That was up sharply from 0.7 percent for the 12 months ended Dec. 31.