WASHINGTON -- Consumer inflation rose a slim 0.2 percent in October, the best showing in four months, as gasoline and other energy prices fell.
The Labor Department reported today that the small advance in its Consumer Price Index, the most closely watched inflation gauge, followed a modest 0.4 percent rise in September. It was the smallest increase since June, when consumer prices were unchanged, and was in line with most analysts' expectations.
So far this year, consumer prices have been rising at an annual rate of 2.8 percent, compared with a 1.6 percent increase in 1998, but all of the acceleration has reflected higher energy costs.
Outside the volatile food and energy sectors, prices were up by 0.2 percent leaving the "core" rate of inflation rising at a much more moderate 1.9 percent so far this year. The monthly gain in the core rate matched many analysts' forecasts.
The report comes one day after Federal Reserve policy-makers boosted interest rates by a quarter of a point. The Fed's action marked the third time increase this year in the federal funds rate, the rate banks charge each other on overnight loans. That move makes borrowing more expensive for consumers and businesses.
At the same time, the Fed signaled that additional rate increases may not be needed in the near future.
Many economists believe the central bank will avoid raising rates again for a few months, possibly until February or March, depending on what economic data tell the Fed about how quickly the economy is growing and the prospects for inflation down the road.
In a separate report, the Commerce Department said today that construction of new homes and apartments rose 0.1 percent in October to 1.63 million units, in line with analysts' expectations. New construction rebounded following a 1.8 percent decline in September, reflecting in part the impact of Hurricane Floyd, which raked the East Coast that month.
On the consumer price front, energy costs, which had risen sharply over the last three months, fell by 0.1 percent in October, the biggest decline since a 1.2 percent drop in June.
Gasoline prices declined by 0.4 percent in October, also the best showing since June. The lower gasoline prices reflect a modest drop in crude oil prices and less demand by motorists after the peak summer driving season, economists say. Natural gas prices also fell by a sharp 1.4 percent, the biggest decline since January 1998.
Food costs were also tame, rising 0.2 percent in October as sharp declines in prices for pork, poultry and fresh vegetables helped to offset rising prices for beef and dairy products. Fresh fruit prices held steady.
A 0.6 percent decline in cigarette and other tobacco prices helped to restrain growth in overall consumer prices.
While inflation was contained in most other areas, apparel prices rose for the second straight month, increasing by a brisk 0.6 percent in October reflecting higher prices for fall and winter clothing.
New car prices also rose 0.1 percent in October and airline fares rose a sharp 5.3 percent, the biggest increase since July.
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