Surging energy costs drove US consumer prices up by a hefty and larger-than-expected 0.6 per cent last month, the biggest jump since May, a government report showed today.
A 4.2 per cent rise in energy prices in October accounted for over half of the overall rise in the consumer price index, the most widely used gauge of US inflation.
Economists on Wall Street had expected energy prices to soar, but thought the CPI would advance just 0.4 per cent .
Excluding volatile food and energy prices, the CPI rose a moderate 0.2 per cent , a slowdown from a 0.3 per cent September advance but a touch higher than the 0.1 per cent gain expected on Wall Street.
The report was likely to keep alive inflation concerns ignited by news on Tuesday that prices received by producers in October posted their largest rise since January 1990.
Economists said the producer price report buttressed the case for continued interest-rate rises from the Federal Reserve, which bumped up overnight borrowing costs by a quarter-per cent age point to 2 per cent last week.
The report on consumer prices showed gasoline costs shot up 8.6 per cent and fuel oil prices up 9.4 per cent , the biggest increase for both since February 2003. Natural gas prices rose 0.6 per cent , but electricity costs fell 1.6 per cent.
Food prices also posted a steep rise last month, gaining 0.6 per cent.
Analysts had said a big jump in food costs at the producer level in October reflected the impact of recent hurricanes in the Southeast.
The cost of lodging, such as hotel rooms and college dorms, and prices for used cars - two categories that helped fuel an acceleration in core inflation in September - rose at a more moderate pace last month.
But the cost of new cars rose 0.4 per cent last month after a 0.2 per cent September drop and apparel prices gained 0.2 per cent after an unchanged reading, a combination that partially offset the lodging and used car impact.