By Ben Leubsdorf

Consumer prices rose in November for the fourth consecutive month, the latest sign of firming U.S. inflation as the Federal Reserve moves ahead with its plan to gradually ramp up short-term interest rates.

The consumer-price index, a measure of what Americans pay for everything from potatoes to prescription drugs, increased a seasonally adjusted 0.2% in November from a month earlier, the Labor Department said Thursday. Prices rose last month for gasoline, rent and used cars but fell for groceries and clothing.

Excluding the often-volatile categories of food and energy, prices also rose 0.2% from October. The rise in both overall and core prices matched economists' expectations, though the monthly gain in core prices was a more modest 0.151% without rounding and little changed from October's 0.149% increase.

Pressure on core-services prices "has decelerated a little bit from earlier this year," J.P. Morgan Chase analyst Zina Bushra Saijid said. "We were seeing really strong increases in medical prices, and those have come down a little bit."

But "the underlying macroeconomic fundamentals are favorable for inflation firming going forward," she added.

Compared with a year earlier, overall prices in November rose 1.7%, the strongest annual price growth since October 2014. Core prices were up 2.1% on the year for the second straight month.

The Fed this week raised its benchmark federal-funds rate for just the second time since the financial crisis. Evidence of stronger-but-not-runaway price growth could support officials' plan to raise rates at a gradual pace in the coming years.

"As the transitory influences of earlier declines in energy prices and prices of imports continue to fade, and as the job market strengthens further, we expect overall inflation to rise to 2% over the next couple of years," Fed Chairwoman Janet Yellen said Wednesday.

In updated economic forecasts this week, Fed policy makers penciled in three quarter-percentage-point rate increases in 2017.

Inflation has been subdued in the U.S. and other advanced economies for years, a possible sign of underlying economic weakness. Falling oil prices and a strengthening dollar, which makes imports cheaper for U.S. customers, pushed broad price gauges even lower starting in late 2014.

Price growth has rebounded in recent months as energy prices firmed, the labor market continued to tighten and wage growth picked up from its sluggish postrecession pace.

Still, pressures remain uneven. The index for medical care rose 4% on the year in November and shelter costs were up 3.6% from a year earlier. Food prices were down 0.4% from November 2015 and energy prices rose 1.1% on the year.

The Labor Department on Thursday also reported that private-sector U.S. workers saw a 0.3% decline in their inflation-adjusted weekly earnings in November compared with the prior month. Average hourly earnings fell 0.1%, prices rose 0.2% and the average workweek was unchanged from October.

The Fed prefers to measure inflation with a Commerce Department gauge, the personal-consumption expenditures price index. As measured by the PCE index, U.S. inflation has undershot the central bank's 2% annual target for the past 4 1/2 years.

The PCE index in October rose 1.4% from a year earlier, the most in two years, and core prices were up 1.7% on the year. The median projection by Fed policy makers released Wednesday saw both headline and core inflation reaching 2% by late 2018.

Some U.S. companies are beginning to feel the effects of rising labor and other costs as a tightening labor market causes long-subdued wage growth to accelerate moderately.

Brown-Forman Corp., the maker of Jack Daniel's whiskey, has raised prices on some of its products and said it faces pressure from higher material costs, including rising prices for wood to make barrels.

"The global pricing environment remains challenging and while we expect to see modest benefits from price mix for the fiscal year, they will not be sufficient to fully offset somewhat higher content costs," Chief Financial Officer Jane Morreau told analysts last week.

Prices at the pump could rise further as 2016 draws to a close. Oil prices began to rise in late November on news that the Organization of the Petroleum Exporting Countries had agreed to scale back production. The national-average price for a gallon of regular gasoline was $2.24, the U.S. Energy InformationAdministration said Monday, up 8 cents in two weeks.

Still, prices for nonpetroleum imports could be restrained by the dollar, which rose against other major currencies following the Nov. 8 presidential election. Import prices were down 0.1% in November from a year earlier, their 28th consecutive year-over-year decline, according to Labor Department data.

A strong dollar also makes U.S. products more expensive for foreign customers, presenting a headwind for exporters.

Write to Ben Leubsdorf at ben.leubsdorf@wsj.com

(END) Dow Jones Newswires

December 15, 2016 12:37 ET (17:37 GMT)

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