Washington - Inflation inched up in October, as prices rose for consumer goods from fruits and vegetables to gasoline and baby clothes.
The seasonally adjusted Consumer Price Index climbed 0.2 percent, after remaining unchanged in September, the Labor Department said today.
Still, the inflation rate for the first 10 months of this year, at just 1.6 percent, is better than the 11-year low of 1.7 percent for all of 1997.
The small increase in October prices was expected and unlikely to blow the confidence of Fed officials if they are inclined to again cut interest rates at their meeting later today. The Fed has already slashed rates twice this fall in a bid to protect U.S. businesses from economic turmoil around the world.
“By and large inflation by any measure in the aggregate is fairly tame,” said Christopher Swann, a senior economist with the WEFA Group in Eddystone, Pa. “I don't think the Fed is going to get alarmed.”
Some economists, however, argue that the Fed may decide the U.S. economy doesn't need additional stimulus.
In a separate report today, the Commerce Department said inventories of unsold goods at the nation's businesses rose 0.6 percent in September. But sales rose by a bigger 0.8 percent, decreasing the likelihood that stockroom backlogs will slow the economy.
Although export sales have plummeted, causing some factories to lay off workers, unemployment remains near its lowest in a generation. And American consumers -- responsible for two-thirds of the nation's economic activity -- continue to spend briskly.
The economy in the third quarter of the year grew at a healthy 3.3 percent rate, and stock market investors have regained losses since a frightening market drop this summer.
Today, the Dow Jones Industrial Average of stocks was down 35 points in early-morning trading after a boom day Monday, when it closed above 9000 for the first time since July 30.
Energy prices in October rose 0.9 percent, the first increase since May. Gasoline prices, which jumped by 2.7 percent -- the most since August 1997 -- easily offset declining prices for fuel oil, electricity and natural gas.
Gasoline prices, however, are still more than 15 percent lower than a year ago, and energy prices overall have fallen at an 8.9 percent annual rate so far this year.
Food prices were up 0.6 percent in October. While prices for meats including beef, veal and pork fell, the cost of vegetables shot up 5.7 percent. Tomato prices rose more than 20 percent, their biggest increase since March 1997.
The price of fresh fruit was up 2.8 percent, with oranges costing 3.2 percent more.
Core prices -- which exclude volatile food and energy costs and are closely watched by economists -- rose 0.2 percent, the same as the overall index.
Clothing prices were up 0.1 percent, following a drop the month before. Prices for infant and toddler clothes rose 4.2 percent.
The price of medical care rose 0.2 percent in October and is up 3.6 percent from a year ago.
The cost of tobacco products was up another 0.3 percent and has risen nearly 14 percent from a year ago as tobacco companies struggle with multimillion- dollar liability lawsuits and consider government actions that could cost them hundreds of billions.
The price of school books and supplies was up 1.4 percent, but computer prices, influenced by slumping world demand, fell again in October, by 1.5 percent.
Airline fares slipped 0.4 percent and are now slightly -- 0.1 percent -- below prices a year ago.
Meat Industry Insights News Service
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