WASHINGTON – Rising food costs and higher rents offset a drop in gas prices last month, leaving consumer prices only slightly higher in October compared with the previous month.
The consumer price index rose a seasonally adjusted 0.1 percent in October, down from sharp gains of 0.6 percent in the previous two months, the Labor Department said Thursday. In the past year, prices increased 2.2 percent. That's just above the Federal Reserve's inflation target of 2 percent.
The cost of shelter, which includes rents, rose 0.3 percent, the most in more than four years. Clothes and airline fares also rose, while the price of new and used cars fell.
Food prices rose 0.2 percent, while gas fell 0.6 percent. Excluding the volatile food and gas categories, core prices increased 0.2 percent.
Modest inflation leaves consumers with more money to spend, which can boost economic growth. Lower inflation makes it easier for the Fed to continue with its efforts to rekindle the economy. If the Fed were worried that prices are rising too fast, it might have to raise interest rates.
Gas prices rose sharply over the summer and into September, but have since come down. The average price for a gallon of gas nationwide was $3.44 on Wednesday, about 35 cents below last month's level.
Most economists forecast that food prices rose last month. This summer's drought damaged corn, soybeans and other crops. Corn and soybeans are used in animal feed, which means the price of meat and chicken could increase.
And corn is also used in many products found throughout the supermarket, from cereals to soft drinks to cosmetics.