Consumer Price Index Rises 0.6%

Surging energy costs drove up U.S. consumer prices a hefty 0.6% in October, while industrial output and housing starts rebounded strongly from the prior month. Together, the reports showed an economy expanding solidly despite high oil prices.

The Labor Department said a 4.2% rise in energy prices in October accounted for more than half of the overall rise in the consumer price index, the most widely used gauge of inflation. Economists on Wall Street had expected energy prices to soar but thought the CPI would advance just 0.4%.

Excluding volatile food and energy prices, the CPI rose a moderate 0.2%, slowing from a 0.3% September advance but growing a touch more than economists had expected.

Year over year, the so-called core index was up 2%, holding at September’s nearly two-year high.

Separately, the Federal Reserve said industrial production climbed 0.7% in October, well ahead of the 0.3% gain expected in markets, as output bounced back from the restraining effects of a series of late-summer hurricanes.

In a third report, the Commerce Department said housing starts climbed a steep 6.4% to an annual rate of 2.03 million units, the fastest pace since December. Forecasters had looked for a more moderate 1.98-million-unit pace.

Analysts said the data fit with the view that the Federal Reserve would continue to raise interest rates gradually.

“We are moving from a long-lasting ... disinflation to, I think, a new era of mildly rising inflation,” said John Lonski, chief economist at Moody’s Investors Service in New York.

The report on consumer prices showed that gasoline costs shot up 8.6% and fuel oil prices rose 9.4%, the biggest increase for both since February 2003. Food prices also posted a steep rise last month, gaining 0.6%.