U.S. consumer inflation muted in October
WASHINGTON, Nov 20 (Reuters) - U.S. consumer prices
unexpectedly fell in October and the annual inflation rate was
the lowest in four years, which should give the Federal Reserve
room to maintain bond purchases for a while.
The Labor Department said on Wednesday its Consumer Price
Index slipped 0.1 percent last month as gasoline prices fell
sharply, after rising 0.2 percent in September.
In the 12 months through October, the CPI increased 1.0
percent, the smallest gain since October 2009. It had advanced
1.2 percent in September.
Economists polled by Reuters had forecast consumer prices
unchanged last month and increasing 1.0 percent from a year ago.
The Labor Department said as a result of a 16-day government
shutdown last month, the sample of prices used to calculate the
October index was about 75 percent of the amount usually used in
Stripping out the volatile energy and food components, the
so-called core CPI edged up 0.1 percent, rising by the same
margin for a third consecutive month.
That took the increase over the past 12 months to 1.7
percent, matching the prior month's rise.
Tepid domestic demand is keeping a lid on inflation.
The absence of inflation in the economy suggests the Fed
will probably stick to its monthly $85 billion bond buying
program at least through early 2014 as it tries to stimulate
demand through low interest rates.
The Fed targets 2 percent inflation, although it tracks a
gauge that tends to run a bit below the CPI. Some officials at
the U.S. central bank have expressed concern about inflation
being too low.
Last month, inflation was suppressed due to a 2.9 percent
drop in gasoline prices. That was the largest decline since
April. Food prices ticked up 0.1 percent in October after being
flat the prior month.
Within the core CPI, apparel prices fell for a second
straight month and the increase in the cost of shelter was the
smallest since December.
Medical care costs dipped and prices for new vehicles
(Reporting by Lucia Mutikani; Editing by Krista Hughes)
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