WASHINGTON - Consumer prices rose in October at half the pace of a month earlier, a sign that rising energy costs in the past year are not influencing what businesses charge for goods and services, government figures showed Thursday.
The consumer price index rose 0.2% last month, restrained by cheaper cars and tobacco, after a 0.5% September increase, the Labor Department said. Core consumer prices, which exclude energy and food costs, also rose 0.2% after a 0.3% rise in September.
A leading group of economists said Thursday that inflation will start to decline next year as the series of six interest rate increases by the Federal Reserve and lower oil prices take hold.
Consumer price inflation will slow to a 2.7% pace in 2001 after a projected peak of 3.4% this year, according to a forecast by the National Association for Business Economics.
The year-over-year change in core consumer costs has declined since reaching an eight-and-a half-year high in January. That suggests the record economic expansion will reach its 10th anniversary early next year with gains in worker productivity helping companies absorb higher energy prices.
"The worst of the fallout from higher oil prices may be behind us," said Neal Soss, chief economist at Credit Suisse First Boston Inc. in New York.
Compared with the same month last year, the core consumer price index in October was 3.4% higher. That is down from the 3.8% year-over-year increase in January, which was the highest since a similar gain in August 1991.
The Labor Department also said Thursday that first-time claims for unemployment benefits fell by 20,000, to a total of 326,000 last week. In the previous week, claims surged to their highest in almost two years, mostly because of layoffs in the auto industry.
Energy prices, which account for about one-tenth of the price index, rose 0.2% in October, compared with a 3.8% jump in September. Energy costs have risen 15.9% since October of last year.
The October increase reflected a 5.1% increase in natural gas prices and a 1.3% pickup in the cost of fuel oil. Still, the cost of gasoline fell 1.4%, after a 5.4% increase in September.