WASHINGTON — Consumer prices edged up faster than expected in October, driven higher by another increase in energy prices and the biggest jump in new car prices in 28 years.
Still, prices are lower than they were a year ago and inflation is expected to remain subdued amid a slow economic recovery.
The Labor Department said Wednesday that consumer prices rose 0.3 percent in October, a bit more than the 0.2 percent economists had expected. Core inflation, which excludes energy and food, rose 0.2 percent, compared with analysts' expectation for a 0.1 percent rise.
Overall prices since October 2008 are down 0.2 percent, reflecting the effects of the longest recession since the 1930s. Even though economists believe the downturn ended over the summer, the unemployment rate has continued to rise, hitting a 26-year high of 10.2 percent in October.
Weak labor markets have kept a lid on wage pressures and the fragile economy has made it tough for businesses to raise the price of their products.
The absence of inflation has given the Federal Reserve the room to push a key interest rate to a record low near zero in an effort to boost the economy.
Fed pledges to hold interest rates low
Fed Chairman Ben Bernanke said earlier this week that he expected inflation would remain "subdued for some time." Many economists don't believe the Fed will even consider beginning to raise interest rates until the unemployment rate peaks, probably next summer.
For October, energy prices rose 1.5 percent, the biggest increase since a 4.6 percent jump in August. The advance was driven by a 6.3 percent rise in home heating oil and a 1.6 percent increase in gasoline prices.
Food prices edged up 0.1 percent in October as a big jump in prices of dairy products was partially offset by a drop in the category that includes meats, poultry and fish.
Outside of food and energy, the 0.2 percent rise in core inflation was driven by a 1.6 percent surge in the cost of new autos. Airline fares also rose 1.7 percent, reflecting higher fuel costs.
Offsetting those gains was a 0.4 percent drop in clothing costs as department stores continue to struggle to attract shoppers in a weak economy.
Bernanke warned in his speech Monday that "headwinds" -- including rising unemployment and hard-to-get credit -- will restrain the recovery.
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