Go to the Globe and Mail homepage

Jump to main navigationJump to main content

A U.S. flag decorates a for-sale sign at a home in the Capitol Hill neighbourhood of Washington, in this August 21, 2012 file photo. (JONATHAN ERNST/Reuters)
A U.S. flag decorates a for-sale sign at a home in the Capitol Hill neighbourhood of Washington, in this August 21, 2012 file photo. (JONATHAN ERNST/Reuters)

U.S. inflation remains modest despite higher housing costs Add to ...

U.S. consumer prices rose in October as the cost of shelter surged by the most in over four years, while gasoline prices fell in a boost for consumer spending power.

The consumer price index increased 0.1 per cent last month, in line with analysts’ expectations, data from the Labor Department showed on Thursday.

More Related to this Story

The data still pointed to only modest inflation pressures that appear unlikely to derail the U.S. Federal Reserve’s plan to keep interest rates low for an extended period.

Prices for shelter, which include rent, rose 0.3 per cent during the month, the most since 2008, and accounted for over half of the overall increase in the CPI. That could be a hopeful sign for the economy if it is because landlords felt they have more leverage to raise rents. Rents for primary residences rose 0.4 per cent.

Gasoline prices fell 0.6 per cent in October after climbing 7 per cent the prior month. That was the first drop in gasoline prices since June. Higher costs at the pump have forced many American consumers to cut back on other spending.

A measure of underlying inflation was relatively muted. The core CPI, which excludes food and energy prices, increased 0.2 per cent.

In the 12 months to October overall consumer prices increased 2.2 per cent, up a tenth of a point from September’s reading. Core prices rose 2 per cent in the year through October.

Most economists don’t see inflation threatening the economy in the short or long term.

However, some believe the U.S. Federal Reserve would tolerate prices rising faster than the central bank’s 2-per-cent target over the shorter term to allow faster economic growth as the country recovers from the 2007-09 recession.

The Fed targets a separate measure of inflation calculated by the Commerce Department which tends to run cooler than the CPI.

Follow us on Twitter: @GlobeBusiness

In the know

Most popular video »

Highlights

More from The Globe and Mail

Most Popular Stories