Here’s Another Sign the Fed Could Raise Rates Soon by Reuters @FortuneMagazine November 17, 2015, 10:05 AM EST E-mail Tweet Facebook Linkedin Share icons U.S. consumer prices increased in October after two straight months of declines as the cost of gasoline and a range of other goods rose, a tentative sign that the drag on inflation from a strong dollar and lower oil prices was starting to ease. The modest rise in inflation last month could offer more support to expectations that the Federal Reserve will raise interest rates next month. The Labor Department said on Tuesday its Consumer Price Index increased 0.2% last month, reversing September’s 0.2% drop. In the 12 months through October, the CPI advanced 0.2% after being unchanged in September. Economists polled by Reuters had forecast the CPI rising 0.2% in October and edging up 0.1% from a year ago. Signs of stabilization in prices after a recent downward spiral is likely to be welcomed by Fed officials and give them some confidence that inflation will gradually move toward the central bank’s 2.0% target. Inflation has persistently run below target. In the wake of a robust October employment report, the U.S. central bank is expected to raise its benchmark overnight interest rate from near zero at its Dec. 15-16 meeting. There is hope tightening labor market conditions, characterized by a jobless rate now in a range that some Fed officials view as consistent with full employment will put upward pressure on wages and drive inflation toward its target. The so-called core CPI, which strips out food and energy costs, gained 0.2% after a similar rise the prior month. Rents and medical costs accounted for much of the increase in the core CPI last month. In the 12 months through October, the core CPI increased 1.9% after rising by the same margin in September. The Fed tracks the personal consumption expenditures price index, excluding food and energy, which is running below the core CPI. The dollar’s 18% rise against the currencies of the United States’ main trading partners since June 2014 has weighed on prices of goods such as apparel and automobiles. Last month, gasoline prices rose 0.4% after falling 9.0% in September. There were also increases in the cost of electricity. Food prices edged up 0.1%, the smallest gain since May, after rising 0.4% the prior month. Four of the six major grocery store food group indexes rose last month, with cereals and bakery products posting the largest increase since August 2011. The rental index increased 0.3% after rising 0.4% in September. Medical care costs rose 0.7%, the largest increase since April. Hospital costs increased 2.0%. Airline fares rose 1.5%, ending a string of three consecutive declines. There were also increases in recreation costs, but apparel prices recorded their biggest decline since December.