WASHINGTON: U.S. consumer prices jumped by the most in seven months in October, which together with abating fears of a recession, support the Federal Reserve's signal for no further interest rate cuts in the near term.
The consumer price index increased 0.4per cent last month as households also paid more for energy products, food and other goods. That was the largest gain in the CPI since March and followed an unchanged reading in September. In the 12 months through October, the core CPI increased 2.3per cent after rising 2.4per cent in September.
Last month's jump in healthcare costs suggest an uptick in the core PCE price index last month. October producer price data due to be published on Thursday will shed more light on the core PCE price index, which will be released later this month. Owners' equivalent rent of primary residence, which is what a homeowner would pay to rent or receive from renting a home, climbed 0.2per cent in October after rising 0.3per cent in September. Other shelter categories also softened last month.
"Fed officials should go to the doctor if they think there is no inflation in the economy," said Chris Rupkey, chief economist at MUFG in New York.Used motor vehicles and trucks prices increased 1.3per cent after decreasing 1.6per cent in September. The cost of recreation surged 0.7per cent, the largest increase since February 1996. Consumers also paid more for personal care products.