news.yahoo.com/s/ap/20051116/ap_on_bi_go_ec_fi/economy
By MARTIN CRUTSINGER, AP Economics Writer 2 hours, 3 minutes ago WASHINGTON - Consumer inflation, helped by a retreat in gasoline prices, slowed last month after racing ahead at the fastest clip in a quarter-ce ntury in September. But in a bad sign for the upcoming home heating seas on, natural gas prices rose sharply.
The Labor Department reported Wednesday that consumer prices rose 02 per cent in October after soaring 12 percent in September, when the Gulf Co ast hurricanes caused gasoline prices to spike briefly above $3 per gall on. The easing of overall inflation pressures reflected a 02 percent decline in energy costs after a record 12 percent jump in September. Most of th at downward pressure came from a 45 percent drop in gasoline prices. However, natural gas, which is used to heat many homes, went the other wa y It surged by 14 percent, the biggest monthly increase in nearly four years. The government already is forecasting that natural gas users can expect t o see their bills increase by 48 percent this winter heating season, or $350 extra for the typical household. People who use home heating oil wi ll see a 32 percent increase, which also averages to $350 more. Core inflation, which does not include the volatile food and energy areas , was up by 02 percent in October after five straight months of 01 per cent increases. While the acceleration was slight, some analysts worried it might be the start of more widespread inflation pressures. As evidence of that, analysts noted airline fares were up 15 percent in October while hotel and motel rates jumped 35 percent and medical care costs rose by 05 percent, the fastest pace in seven months. Inflation is building in the pipeline," said R ichard Yamarone, chief economist at Argus Research in New York. "It is n o longer a matter of if, but when, those price pressures will start to a ffect the general price level."
Alan Greenspan won approval from the Senate Banking Committee on Wedn esday. The federal funds rate, a key short-term rate, is now at 4 percent. Analy sts said they believe the Greenspan Fed will boost it twice more at its December and January meetings and that Bernanke, who is scheduled to tak e over Feb. The Fed fights inflation by raising the cost of borrowing money, slowing economic activity. "The Fed is quite concerned about letting the inflation genie out of the bottle," Behravesh said. He predicted that core inflation, which has bee n running at an annual rate of 21 percent so far this year, will rise t o 25 percent in coming months. The Fed has been operating for several years with an unofficial target ra te for core inflation of between 1 percent and 2 percent. Bernanke said at his confirmation hearing Tuesday that he would like to e stablish an official inflation target for the Fed, but said he would onl y move after further study and after gaining a consensus of other Fed of ficials. Food costs edged up 03 percent in October, a slight acceleration from a 02 percent September increase, while clothing costs fell by 04 percent and new car prices rose 05 percent.
Commerce Department reported that business inventories rose by 05 percent in September, the largest increase in eight months, reflecting in part rising levels of un sold autos.
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Consumer prices rose 02 percent in October despite a dip in energy p rices as the cost of housing notched the largest gain in nearly five yea rs, government data showed on Wednesday.
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