Consumer prices up 0.2 percent in November

WASHINGTON (AP) _ Consumer inflation edged up 0.2 in November as tamer energy costs and cheaper clothing prices helped to blunt the biggest jump in tobacco costs in seven months. <br><br>The Labor Department

Friday, December 15th 2000, 12:00 am

By: News On 6

WASHINGTON (AP) _ Consumer inflation edged up 0.2 in November as tamer energy costs and cheaper clothing prices helped to blunt the biggest jump in tobacco costs in seven months.

The Labor Department reported Friday that the advance in its Consumer Price Index, the government's most closely watched inflation gauge, matched October's inflation, when prices also rose by a a seasonally adjusted 0.2 percent.

The report also showed that ``core'' prices, for goods other than food and energy _ which can swing widely from month to month _ rose by 0.3 in November, the largest increase since September. In October, core prices rose 0.2 percent.

The government said a large, 3.6 percent gain in prices of cigarettes and other tobacco products accounted for most of the upturn. That marked the biggest jump in tobacco prices since a 4.4 percent rise in April. Tobacco prices have been pushed up by the cost of expensive liability settlements.

Analysts were expecting a 0.2 percent rise for both overall consumer prices and core prices in November.

The Federal Reserve pushed up interest rates six times between June 1999 and May of this year in an effort to slow the economy and keep inflation under control.

Fed policy-makers meet next week and many economists expect them to change their policy statement away from a tilt toward raising interest rates to a neutral stance. That position would assume the risks of inflation are no greater than the risks of the economy's stalling. Interest rates are expected to be left unchanged.

Fed Chairman Alan Greenspan recently signaled that the Fed stands ready to cut interest rates if the economy shows signs of slipping into a recession.

President-elect Bush and Vice President-elect Dick Cheney have expressed concerns that the slowdown in economic growth may lead to a recession and have said this is a major reason why Congress next year should pass the Republicans' $1.3 trillion tax-cut proposal.

For the first 11 months of this year, consumer prices rose at an annual rate of 3.5 percent, compared with the 2.7 percent rise in 1999. The pickup has come from soaring energy prices.

But in November, energy prices rose a tiny 0.1 percent, the smallest increase since a 2.9 percent decline in August.

Home-heating-oil costs increased by a slim 0.1 percent. Electricity prices rose a modest 0.2 percent and gasoline prices went up by 0.3 percent. Natural gas prices fell by 0.7 percent, the best showing since August.

Crude-oil prices have risen sharply this year as oil-producing nations limited production and U.S. supplies shrank. That has made gasoline and heating oil more costly. With output increasing, economists expected energy-price increases to ease in coming months.

Food prices were flat in November after a scant 0.1 percent increase the month before. Falling prices for poultry, pork and dairy products offset rising prices for fresh fruits and vegetables.

Clothing prices fell 0.4 percent last month, the biggest decline since July, as retailers discounted prices to lure shoppers into stores.

Airline fares rose 0.7 percent, reflecting the impact of higher fuel costs this year. New-car prices increased a small 0.1 percent, reflecting discounts and incentives by dealers and car makers.