WASHINGTON, Nov 20 (Reuters) - U.S. consumer pricesunexpectedly fell in October and the annual inflation rate wasthe lowest in four years, which should give the Federal Reserveroom to maintain bond purchases for a while.
The Labor Department said on Wednesday its Consumer PriceIndex slipped 0.1 percent last month as gasoline prices fellsharply, after rising 0.2 percent in September.
In the 12 months through October, the CPI increased 1.0percent, the smallest gain since October 2009. It had advanced1.2 percent in September.
Economists polled by Reuters had forecast consumer prices unchanged last month and increasing 1.0 percent from a year ago.
The Labor Department said as a result of a 16-day governmentshutdown last month, the sample of prices used to calculate theOctober index was about 75 percent of the amount usually used inthe CPI.
Stripping out the volatile energy and food components, theso-called core CPI edged up 0.1 percent, rising by the samemargin for a third consecutive month.
That took the increase over the past 12 months to 1.7percent, matching the prior month's rise.
Tepid domestic demand is keeping a lid on inflation.
The absence of inflation in the economy suggests the Fedwill probably stick to its monthly $85 billion bond buyingprogram at least through early 2014 as it tries to stimulatedemand through low interest rates.
The Fed targets 2 percent inflation, although it tracks agauge that tends to run a bit below the CPI. Some officials atthe U.S. central bank have expressed concern about inflationbeing too low.
Last month, inflation was suppressed due to a 2.9 percentdrop in gasoline prices. That was the largest decline sinceApril. Food prices ticked up 0.1 percent in October after beingflat the prior month.
Within the core CPI, apparel prices fell for a secondstraight month and the increase in the cost of shelter was thesmallest since December.
Medical care costs dipped and prices for new vehiclesslipped.
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