A pick-up in energy prices helped drive US consumer prices ahead at the sharpest rate in four months during September, according to a government report on Wednesday that was likely to keep the Federal Reserve wary about inflation.
And separate US official figures out today showed that US housing starts sank in September to a 14-year-low suggesting the struggling property market is still under pressure.
The Labor Department said the Consumer Price Index, the most broadly used gauge of inflation, rose at a 0.3% rate last month after declining 0.1% in August.
The September rise in overall CPI was slightly ahead of Wall Street economists' forecast for a 0.2% rise and was the largest since a 0.7% jump in May.
So-called core prices that exclude food and energy costs were up 0.2% in September, in line with economists' expectations.
Consumer prices in September were 2.8% higher than a year ago, the largest 12-month increase since a matching 2.8% gain in March 2007, department officials said.
Core consumer prices were up 2.1% on a year-over-year basis, and analysts said they may remain at roughly that level.
And separate government figures out today showed that US housing starts sank 10.2% in September.
The report showed the pace of new home construction at an annualised rate of 1.191 million units, weaker than the average forecast of 1.300 million, the lowest since July 1993.
The Commerce Department also revised down its report for August to show a rate of 1.327 million units from an earlier estimate of 1.331 million.
The Commerce Department report showed building permits, a sign of future construction activity, fell 7.3% to a weaker-than-expected annual pace of 1.226 million.
The figures highlight the horrific slump in US real estate after a sizzling market turned suddenly cold last year. Economists say the slump is the main drag on US economic growth.
Oer the past 12 months, US housing starts were down 30.8% and permits were down 25.9%.
The massive declines highlight the fact that builders have a big inventory of unsold homes that are keeping prices down.
With credit conditions tightening and mortgage delinquencies on the rise, the financial sector is also being affected.
Yesterday, Treasury Secretary Henry Paulson said the problems in housing represent 'the most significant current risk' to the US economy and that policymakers and the private sector should mobilise to alleviate the pain and avert future crises.
