Grocery clerk James Delarosa takes inventory of the salad dressing and condiments aisle at a Publix Super Markets Inc. grocery store in Knoxville, Tennessee. Luke Sharrett | Bloomberg | Getty Images

U.S. consumer prices were unchanged for a third straight month in January, leading to the smallest annual increase in inflation in more than 1-1/2 years, which could allow the Federal Reserve to hold interest rates steady for a while. The Labor Department said on Wednesday its Consumer Price Index last month was held down by cheaper gasoline, which offset increases in the cost of food and rents. In the 12 months through January, the CPI rose 1.6 percent, the smallest gain since June 2017. The CPI increased 1.9 percent on a year-on-year basis in December.

Excluding the volatile food and energy components, the CPI gained 0.2 percent, rising by the same margin for a fifth straight month. In the 12 months through January, the so-called core CPI rose 2.2 percent for a third straight month. Economists polled by Reuters had forecast the CPI edging up 0.1 percent in January and the core CPI rising 0.2 percent. The dollar rose against a basket of currencies after the data, while U.S. stock index futures held gains. Prices of U.S. Treasuries were trading lower. Despite the increases in the core CPI, underlying inflation remains moderate. The Fed, which has a 2 percent inflation target, tracks a different measure, the core personal consumption expenditures (PCE) price index, for monetary policy. The core PCE price index increased 1.9 percent on a year-on-year basis in November after rising 1.8 percent in October. It hit 2 percent in March 2018 for the first time since April 2012. PCE price data for December will be released on March 1. It was delayed by a five-week partial shutdown of the federal government that ended on Jan. 25. The Fed kept interest rates unchanged last month and removed from its December policy statement promises of "further gradual increases" in borrowing costs. The U.S. central bank said it would be "patient" before making further rate hikes.

More expensive food