Index of Prices Up 0.2% Last Month

U.S. consumer prices rose more slowly in November as a surge in energy costs a month earlier moderated, the government said Friday.

The Labor Department said its consumer price index, used as a broad gauge of inflation, gained 0.2%, as Wall Street economists had forecast, after registering a 0.6% jump in October.

Excluding volatile energy and food costs, the index was up 0.2% after a matching October gain. Overall energy prices edged up 0.2% after a 4.2% rise in October.

The government said that during the first 11 months of 2004 the CPI rose at a 3.7% annual rate, nearly double the 1.9% rise for all of 2003.

“The rate of consumer inflation is slowly but inexorably moving upward,” said economist Joel Naroff of Naroff Economic Advisors Inc. in Holland, Pa.

The so-called core inflation rate, which does not include food and energy items, also is running well ahead of last year’s pace and at a level that analysts speculated means the Federal Reserve will keep lifting interest rates.

Core CPI in the first 11 months rose at a 2.3% annual rate, more than twice the 1.1% rise in 2003.

“The real story is that at this point, core inflation is running toward the high end of the Fed’s comfort zone,” said economist Richard DeKaser of National City Corp. in Cleveland.

The Labor Department also said U.S. real average weekly earnings -- incomes adjusted for inflation -- shrank 0.4% in both October and November, not a promising sign for spending if consumers are pinched by rising prices.