US consumer prices held steady last month as plunging energy prices offset increases in the cost of food, homes and lodging, the government said today in a report that showed little change in underlying inflation trends.
The consumer price index, the most widely used gauge of US inflation, was unchanged in October, the Labor Department said.
The so-called core index, which strips out sometimes volatile food and energy prices, rose 0.2 per cent. Markets largely shrugged off the data, which came in close to expectations. Economists had expected both the overall CPI and the core index to rise 0.1 per cent.
Analysts said the report showed a lack of inflation that meant the Federal Reserve could afford to keep overnight borrowing costs at a 1958 low of 1 per cent for some time to try to spur jobs creation. "Continued low inflation, which is just what Dr Greenspan ordered," said Stuart Hoffman of PNC Financial Services Group in Pittsburgh.
"It tells me that the Federal Reserve will practice patience and these are precisely the kind of low inflation numbers that will reinforce their patience." Energy prices plunged 3.9 per cent in October, reversing course after big gains in the prior two months. Food prices rose a sharp 0.6 per cent, reflecting the biggest advance in beef prices in nearly 25 years.
A ban on imports of Canadian beef, put in place after Canada discovered one case of mad cow disease earlier this year, have driven prices higher, analysts say.