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November 19, 2009

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Home » Business » Economy

US sees faster rise in prices

CONSUMER prices in the United States edged up faster than expected last month, driven higher by another increase in energy prices and the biggest jump in new car prices in 28 years.

Still, prices are lower than they were a year ago and inflation is expected to remain subdued amid a slow economic recovery.

The Labor Department yesterday said consumer prices rose 0.3 percent in October, a bit more than the 0.2 percent economists had expected. Core inflation, which excludes energy and food, rose 0.2 percent, compared with analysts' expectation for a 0.1 percent rise.

Overall prices since October 2008 are down 0.2 percent, reflecting the effects of the longest recession since the 1930s. Even though economists believe the downturn ended over the summer, the unemployment rate has continued to rise, hitting a 26-year high of 10.2 percent in October.

Weak labor markets have kept a lid on wage pressures, and the fragile economy has made it tough for businesses to raise the price of their products.

The absence of inflation has given the Federal Reserve the room to push a key interest rate to a record low near zero in an effort to boost the economy.

Fed Chairman Ben Bernanke said earlier this week that he expected inflation to be "subdued for some time." Many economists don't believe the Fed will consider beginning to raise interest rates until the jobless rate peaks, probably next summer.

For October, energy prices rose 1.5 percent, the biggest hike since a 4.6 percent jump in August. The climb was driven by a 6.3 percent jump in home heating oil.




 

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