Thursday November 16, 9:21 am Eastern Time
Consumer Prices Rise Modestly in October
By Joanne Morrison
WASHINGTON (Reuters) - U.S. consumer prices rose modestly last month as inflation
remained tame in the economy across a broad array of sectors, government figures showed
on Thursday in a report likely to ease inflation concerns at the Federal Reserve.
The Labor Department said its Consumer Price Index, a key inflation gauge, rose by 0.2
percent in October, following a 0.5 percent rise in September. Energy prices rose a slight 0.2 percent after gaining 3.8 percent
the month earlier.
Excluding the more volatile food and energy components, so-called ``core'' inflation edged up 0.2 percent in October, down
from a 0.3 percent increase a month earlier.
The consumer price figures were in line with Wall Street's expectations of a 0.2 percent rise in overall consumer prices and a
0.2 percent gain in core inflation. They came a day after Federal Reserve policy makers opted to keep U.S. interest rates
unchanged, a tack taken since the last of six increases was instituted in May.
``It is consistent with the view the economy is slowing and inflation remains very subdued. There is no reason to believe from
these numbers that there will be any pressure on the Fed to raise short-term interest rates,'' said Hugh Johnson,
chief investment officer at First Albany Corp in Albany, New York.
On Wednesday the Fed, while announcing it would keep interest rates steady, continued to warn that inflation still poses a
threat to the slowing economy.
The Labor Department said real earnings, adjusted for inflation, for private-sector workers were unchanged in October versus
a decline of 0.1 percent in September.
Separately, the Labor Department also said the number of Americans filing first-time unemployment claims last week fell
20,000 to 326,000. But the closely watched four-week moving average, considered a more reliable barometer, rose to
322,250, the highest level since January 23, 1999 when it reached 329,000.
Thursday's report showed only slight increases in most components of the Consumer Price Index. Food and beverage prices
gained only 0.1 percent last month, after a 0.1 percent rise a month earlier.
But transportation costs fell 0.4 percent last month -- reflecting lower gasoline prices -- after gaining 1.0 percent a month
earlier. Airline fares fell 3.5 percent in October after dropping 2.2 percent.
Compared with a year ago, consumer prices were up 3.4 percent and core inflation rose a more modest 2.5 percent, the
Department said.
Last month's slight rise in consumer prices is likely to quell policy makers' inflation worries. The Federal Open Market
Committee next meets on Dec. 19 to discuss monetary policy and is widely expected then to drop its warning about inflation
risks.
Gruß Dampf
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