By Amara Omeokwe and Harriet Torry 
 

WASHINGTON--U.S. consumer prices rose in October, driven by higher energy costs.

The consumer-price index-which measures what Americans pay for everyday items ranging from clothing to dental services-rose a seasonally adjusted 0.4% in October from the previous month, the Labor Department said Wednesday. That exceeded the expectations of economists surveyed by The Wall Street Journal, who forecast a 0.3% rise.

Excluding the often volatile food and energy categories, prices were up 0.2% in October from September, matching economists' expectations for so-called core prices.

October's increase in prices followed muted inflation readings in September, when the headline consumer-price index was unchanged and core prices rose 0.1%.

Energy prices, which rose 2.7% in October from the previous month, accounted for more than half the gains in the headline index, according to the Labor Department.

From a year earlier, consumer prices in October increased 1.8%, higher than the 1.7% year-over-year increase seen in the previous two months. Core prices were up 2.3% over the year.

A separate Labor Department report released Wednesday showed U.S. inflation-adjusted wages declined, even as the U.S. unemployment rate hovered near a 50-year low. Wage gains, subdued inflation and a solid labor market have helped spur consumer spending this year, which in turn has helped prop up the broader economy.

Federal Reserve policymakers look to inflation readings to help gauge the economy's underlying strength and guide interest-rate policy. The personal consumption expenditures index-a separate measure from the Commerce Department and the Fed's preferred inflation gauge-rose 1.3% in September from a year earlier. The Fed targets 2% inflation as measured by the PCE index.

Fed officials have cut rates three times since July to cushion the U.S. economy against a slowdown, but Fed Chairman Jerome Powell last month pointed to firming, albeit muted, inflation trends when signaling that further rate hikes are likely on hold.

"Overall, we've seen moderate growth, a strong labor market, inflation moving up. We see the outlook is for more of the same," Mr. Powell said at a press conference.

Wednesday's consumer-price index report showed Americans paid more for items such as food, used cars and medical services in October. Energy prices were led higher by a 3.7% increase in gas prices.

Meanwhile, the Labor Department's report on real earnings showed inflation-adjusted, average hourly wages fell a seasonally adjusted 0.2% in October from September and were up 1.2% from October 2018. Combined with stronger inflation, a slowing pace of wage growth could pose roadblocks for consumer strength and the broader economy. Household spending, for instance, was a major contributor to a 1.9% increase in gross domestic product in the third quarter from the previous quarter, at a seasonally adjusted annual rate.

Another measure of inflation comes Thursday with the release of October figures for the producer-price index, which indicates changes in the prices businesses receive for their goods and services.

The Labor Department's report on consumer prices can be found at: http://www.bls.gov/news.release/pdf/cpi.pdf

(END) Dow Jones Newswires

November 13, 2019 08:45 ET (13:45 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.