US consumer prices rise most in 7 months at higher gasoline prices

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Consumers paid more for gasoline and medical treatment in October, but inflation was low for most goods.

Figures: Americans paid higher prices for gasoline, medical treatment and recreation in October, but inflation remained broadly low and fairly stable.

The consumer price index jumped 0.4% in October, with energy accounting for more than half of the increase, the government said Wednesday.

Economists polled by MarketWatch had forecast a 0.3% advance.

The increase in living costs over the last 1[ads1]2 months increased to 1.8% from 1.7%, but it is still well below last year's peak of almost 3%.

Another closely monitored measure of inflation that eliminated food and energy advanced 0.2% last month. The annual increase in the so-called core rate fell to 2.3% from 2.4%.

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What happened: Gas prices rose 3.7% in October, but Americans still pay less to fill up now than they did a year ago. Gas costs have fallen more than 7% over the past year.

Medical treatment prices rose 1%, marking the largest increase in more than three years. Health care costs have increased again after a long period of stable prices.

The cost of recreation – ticket prices, cable TV and the like – also saw an unusually large increase last month. 0.7% acceleration was the biggest gain since 1996.

Food prices rose in October, but the cost of eating out is increasing much faster than eating in.

The cost of "food at home" – groceries – has risen only 1 % the last year. Prices for "food from home" have shot up 3.3%, which may reflect higher labor costs. Many states have increased minimum wages.

Prices fell for clothes, household furniture, new cars and trucks and airfares. The increase in rent was only 0.1%, the smallest increase since 2011. The cost of rent and housing has eased somewhat this year

After adjusting for inflation, hourly wages fell 0.2%. However, they have risen by a solid 1.2% over the past year.

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Big picture: Inflation has risen below 2% a year. Inflation just doesn't fluctuate much despite higher wages, the tightest labor market in 50 years and price increases linked to US tariffs.

The low inflation rate, in turn, has given the Federal Reserve leeway to cut interest rates to expand economic expansion now in its 11th year.

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The central bank wants rates to rise a little higher for the economy, but low inflation allows Americans to stretch the dollar further and Buy more goods and services. Strong consumer spending increased gross domestic product in the spring and summer and is likely to remain robust during the holiday season.

Market Response: Dow Jones Industrial Average

DJIA, -0.10%

and S&P 500

SPX, -0.20%

was set to decline in Wednesday's trade.

The 10-year return on the Treasury

TMUBMUSD10Y, -2.35%

was little changed at 1.88%.

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