US consumer prices rose more than expected in October as energy costs climbed and prices on new vehicles spiked by the most in 28 years, though most prices were well contained, government data showed today.
The Labour Department said its Consumer Price Index jumped 0,3% on a seasonally adjusted basis, more than the 0,2% increase analysts polled by Reuters had anticipated, after rising an unrevised 0,2% in September.
Energy prices were up 1,5% and the department said that increase, the fifth in the last six months, pushed the index higher.
Core prices, which exclude food and energy, rose a more moderate 0,2%.
A spike in prices on used cars and trucks and new vehicles accounted for more than 90% of the rise in core prices, the department said. It was the biggest increase in new vehicle prices since 1981, while used cars saw their biggest price jump since 1980.
Analysts had expected the government’s car buying program, known as “Cash for Clunkers,” this past summer to continue to push up consumer prices through October, because the program required the destruction of old cars.
“Inflation is utterly tame,” said Tom Porcelli, senior economist at RBC Capital Markets in New York.
Compared to the same period last year, unadjusted consumer prices were down 0,2%. Consumer prices have been falling on an annual basis since March. Core prices, though, rose 1,7% from October 2008.
US Treasury bonds, which are sensitive to inflation expectations, extended their losses after the data was released and the euro pared its gains against the dollar.
Some have worried massive efforts by both the US
government and Federal Reserve to restore growth will ignite inflation, but on Monday Fed Chairman Ben Bernanke said economic slack should keep price rises in check.
Data released yesterday showed that at the wholesale level inflation has been muted. Producer prices, which include those received by farms, factories and refineries, rose 0,3% last month, below expectations for a 0,5% gain, and core producer prices unexpectedly dropped 0,6% in the largest decline since July 2006.