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U.S. Consumer Prices Inch Up 0.1% In October Amid Higher Shelter Costs

U.S. Consumer Prices Inch Up 0.1% In October Amid Higher Shelter Costs
11/15/2012 9:36 AM ET

Consumer prices in the U.S. saw a modest increase in the month of October, according to a report released by the Labor Department on Thursday, with the price growth matching economist estimates.

The Labor Department said its consumer price index inched up by 0.1 percent in October after rising by 0.6 percent in each of the two previous months. The modest price increase came in line with the expectations of economists.

Energy prices showed a modest decrease for the month after surging higher recently, with prices edging down by 0.2 percent in October after jumping by 4.5 percent in September and 5.6 percent in August.

Decreases in the prices for gasoline and natural gas more than offset higher prices for electricity and fuel oil, the Labor Department said.

The report also showed that food prices rose by 0.2 percent in October following a 0.1 percent increase in September. The index for food at home climbed 0.3 percent, the largest increase since September of 2011.

Excluding food and energy prices, the core consumer price index rose by 0.2 percent in October after inching up by 0.1 percent in September. The core price growth also matched estimates.

The modest increase in core prices was partly due to a 0.3 percent increase by the shelter index, which reflected the biggest increase since March of 2008.

The Labor Department said the increase by the shelter index and increases in prices for apparel and airline fare more than offset declines in prices for used cars and trucks, new vehicles, and recreation.

Compared to the same month a year ago, consumer prices rose by 2.2 percent in October, reflecting an acceleration from the 2.0 percent annual growth seen in September.

The report said core consumer prices increased at an annual rate of 2.0 percent in October, unchanged from the previous month.

Peter Boockvar, managing director at Miller Tabak, said, "Bottom line, on a seasonally adjusted basis, the CPI index went to another all time high."

"I continue to state the absolute index level in addition to the rate of change because many Americans are not seeing their highest income ever just as we're seeing the highest cost of living ever," he added. "With consumer spending about 70% of growth, it obviously is important."

On Wednesday, the Labor Department released a separate report showing an unexpected drop in U.S. producer prices for the month of October, with the decrease reflecting lower prices for light trucks and passenger cars.

The producer price index fell by 0.2 percent in October following a 1.1 percent jump in September. The drop came as a surprise to economists, who had expected producer prices to increase by 0.2 percent.

Excluding food and energy prices, core producer prices still edged down by 0.2 percent in October, marking the first drop since a 0.1 percent decrease in November of 2010. Core prices had also been expected to rise by 0.2 percent.

The report also showed that producer prices increased at an annual rate of 2.3 percent in October, reflecting the biggest year-over-year increase since a 2.8 percent increase in March.

Core prices increased at an annual rate of 2.1 percent in October compared to the 2.3 percent growth seen in the previous month.

by RTT Staff Writer

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