Nov. 15 (Bloomberg) -- Consumer prices in the U.S. rose in October at the same pace as the prior month, led by increases in fuel costs that threaten to boost inflation and slow growth.
The cost of living increased 0.3 percent in October, as forecast, the Labor Department said today in Washington. So-called core producer prices, which exclude fuel and food costs, rose 0.2 percent for a fifth month.
Gasoline and heating-oil prices started rising in late October and have continued higher this month, suggesting fuel costs will remain a concern. Still, the damage higher energy bills may inflict on spending and investment will keep the Federal Reserve focused on ensuring the expansion is sustained.
``Higher energy prices are something the Fed is going to continue to watch, but for as long as core prices are stable it's not really going to be an issue,'' Jonathan Basile, an economist at Credit Suisse Group in New York, said before the report.
The gain in prices matched the median forecast of 79 economists in a Bloomberg News survey. Estimates ranged from gains of 0.1 percent to 0.5 percent.
Core prices were forecast to rise 0.2 percent.
First-time claims for jobless benefits rose a greater-than- forecast 20,000 to 339,000 last week, the Labor Department also reported. The figures are consistent with a slowing job market, economists said.
Over the past 12 months, consumer prices rose 3.5 percent, the most since August 2006, compared with a 2.8 percent rise in the 12 months through September. Consumer prices excluding food and energy rose 2.2 percent in the year through October, compared with a 2.1 percent increase in the 12 months ended in September. It rose for the first time since January.
First 10 Months
So far this year, prices are rising at a 3.6 percent rate, compared with a 2.4 percent rate through the first 10 months of 2006. Core prices are rising at a 2.3 percent pace, compared with a 2.8 percent pace in the same period a year earlier.
Today's report showed energy prices climbed 1.4 percent, the most since May. Gasoline prices also increased 1.4 percent and electricity costs increased 1.5 percent, the most since January.
Crude oil futures on the New York Mercantile Exchange averaged $85.26 a barrel in October, up from $79.63 in September, and rose to a record $98.62 on Nov. 7. The price of regular gasoline at the pump exceeded $3 a gallon this month for the first time since July, according to AAA.
The cost of fuel is prompting some businesses to increase prices. Airlines have raised fares seven times since Sept. 1, and all five of the biggest U.S. carriers last week added a $10 round- trip fuel surcharge to ticket prices. Today's report showed airfares jumped 1.6 percent in October.
Source: Bloomberg
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