Consumer prices rose only modestly last month as higher costs for many goods and services were partially offset by falling gasoline prices, the Labor Department reported yesterday.
The department's consumer price index rose 0.2 percent in October, the smallest increase in four months. The CPI had soared 1.2 percent in September, the biggest monthly jump in 25 years, reflecting the spike in energy prices caused by hurricanes Katrina and Rita.
The hurricanes temporarily disabled oil rigs, refineries and pipelines along the Gulf Coast, pushing up prices for crude oil, gasoline, natural gas, diesel fuel, jet fuel and heating oil. All together, energy prices for consumers surged 12 percent in September, the fastest rate on record.
Energy prices have eased as production facilities have been repaired, sliding 0.2 percent in October. But they remain nearly 30 percent higher than a year ago, the department said.
And the fall in energy prices last month primarily reflected a steep, 4.5 percent drop in gasoline prices. Prices continued to climb in October for natural gas, electricity and heating oil.
Consumers also paid higher prices last month for new cars, food, medical care, hotels and motels, air travel, toys and educational supplies. Those increases partly reflected businesses' decisions to raise prices in October to cover their higher energy costs in September, analysts said.
Several food and consumer product companies have recently announced plans to raise prices to cover their higher costs for transportation and plastic packaging. Kraft Foods Inc., for example, said earlier this month it will raise the prices of Oscar Mayer luncheon meats, refrigerated Jell-O pudding, cookies, crackers and California Pizza Kitchen pizzas. Hershey Co. is raising prices of Jolly Rancher and Twizzlers candies. Kimberly-Clark Corp. is boosting the prices of its napkins and toilet tissue.
"Businesses are having success increasing prices and passing on higher energy costs," said Nariman Behravesh, chief economist at Global Insight Inc., an economic forecasting and analysis firm.
Prices fell last month for some items, such as clothing, telephone service and personal computers.
Economists often look at so-called core price measures that exclude food and energy to get a sense of underlying inflation pressures. The core CPI rose 0.2 percent in October, a mild increase but the largest in seven months.
The core CPI rose 2.1 percent over the 12 months that ended in October, up slightly from 2 percent in the year ended in September.
Workers' wages rose faster than inflation in October but have lagged over the past year, the Labor Department said in a separate report.
Average weekly earnings for most workers rose 0.4 percent last month, after adjusting for inflation, the biggest gain in 15 months. But those wages buy 1.6 percent less than they did in October of last year, the report said.
Federal Reserve officials remain likely to raise their benchmark short-term interest rate next month and again in January to keep inflation under control, analysts said.