Nov 15, 2007 9:18 am US/Eastern
Consumer Prices, Unemployment Rise
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Continued increases in food costs help push the Consumer Price Index higher. (File)
AP
Consumer inflation posted another elevated reading in October as energy prices shot up by the fastest pace in five months.
The Labor Department reported Thursday that its Consumer Price Index rose by 0.3 percent last month, the second straight month with inflation at that level. The acceleration was occurring because of another jump in energy prices and continued increases in food costs.
Meanwhile, the government said that the number of laid off workers filing claims for unemployment benefits rose by 20,000 last week to 339,000, the highest level in four weeks. Labor Department analysts said the California wildfires boosted the number of jobless claims by about 2,000 and the writer's strike, which has shut down production on many television programs, was also having an impact.
Core inflation, which excludes energy and food, continued to rise at a more moderate rate, rising by 0.2 percent in October, the fifth straight month at that level.
Before the back-to-back 0.3 percent gains in overall prices, consumer inflation had actually fallen by 0.1 percent in August and risen by just 0.1 percent in July.
So far this year, consumer prices are rising at an annual rate of 3.6 percent, up by more than a full percentage point from the 2.5 percent increase for all of 2006.
The economy is being buffeted by a steep downturn in housing, turbulence in financial markets and falling consumer confidence, raising fears that the country could dip into a recession in coming months.
Wall Street is hoping that the Federal Reserve, which has already cut interest rates twice, will reduce rates further to keep the economy's problems from triggering a downturn.
But Federal Reserve Chairman Ben Bernanke told Congress' Joint Economic Committee last week that the central bank believes that risks are roughly balanced at the current time between inflation and weaker growth, a comment that was viewed as a signal to markets not to count on further rate cuts. Bernanke and his colleagues also warned economic growth will slow noticeably in coming months.
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