WASHINGTON—Tame inflation, low fuel costs and rising wages are placing extra {dollars} within the pockets of American employees, a constructive signal for shopper spending headed into 2019.

After adjusting for inflation, common hourly earnings rose a seasonally adjusted 1.1% in December from a yr earlier, the strongest progress charge since September 2016, the Labor Division mentioned Friday.

In the meantime, shopper costs declined a seasonally adjusted 0.1% final month from November, the Labor Division mentioned in a separate report. Costs excluding meals and vitality—the “core” measure carefully monitored by Federal Reserve coverage makers—elevated 0.2%.

Muted inflation diminishes the chances the Fed will elevate rates of interest any time quickly. The combo of low value pressures and regular wage beneficial properties seems to depart customers in good condition.

Within the 12 months by means of December, general costs rose 1.9%, the primary time the consumer-price index has been underneath 2% since August 2017 and an indication low gasoline costs are holding down inflation. Excluding the risky meals and vitality classes, so-called core costs have been up 2.2% on the yr.

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Decrease fuel costs in South Carolina than California are one cause 42-year-old Myra Martinez and her household are planning to relocate to Myrtle Seashore from San Luis Obispo within the subsequent few months.

As a real-estate dealer, Ms. Martinez mentioned gasoline is an enormous expense for her. “I hope within the state the place we’re going [the cost of gas] isn’t going to extend dramatically,” she mentioned, including the decrease price of residing in South Carolina means she is going to have the ability to save extra for her youngsters’ training.

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The Labor Division’s measure of annual core inflation, which is watched carefully by the Fed and others as a result of it’s much less risky than the general quantity, has held regular between 2.1% and a pair of.4% since March, after operating beneath 2% for prolonged durations from 2013 by means of 2017.

“These readings point out that shopper inflation stays steady and well-behaved,” economist Kathy Bostjancic of Oxford Economics mentioned in a notice to purchasers. “This gives room for the Fed to proceed very step by step in elevating charges this yr.”

Fed officers have signaled they’re unlikely to boost rates of interest for at the very least just a few months whereas they assess the impression of latest market volatility on the U.S. financial system.

Fed Chairman Jerome Powell on Thursday described inflation as “low and underneath management,” in remarks in Washington, D.C.

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That provides central bankers “the power to be affected person and watch patiently and punctiliously as we see the financial system evolve,” he mentioned.

Headed into the primary quarter, the U.S. financial system seemed to be on a powerful footing, with unemployment at a low 3.9% in December.

Nonetheless, dangers like latest stock-market volatility and uncertainty surrounding the federal government shutdown—now getting into its third week—may damp customers’ urge for food for spending in early 2019.

Some early indicators additionally level to probably disappointing vacation retail gross sales.

Macy’s
Inc.

and different mall-based retailers mentioned Thursday that gross sales petered out on the finish of the yr, clouding what had been upbeat expectations for the vacation gross sales season.

Write to Harriet Torry at [email protected]

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