12/15/2010 10:54 am ET Updated May 25, 2011

Consumer Prices Rise Mildly In November

WASHINGTON (Reuters) - Consumer prices barely rose in November as inflation remains muted amid an anemic recovery, more ammunition for the Federal Reserve to complete its government bond buying program to stimulate the economy.

The Labor Department said Wednesday its Consumer Price Index nudged up 0.1 percent as energy prices rose by the smallest in five months, slowing from a 0.2 percent increase in October.

Excluding food and energy, core CPI ticked up 0.1 percent as expected, after being flat for three straight months.

Economists had expected overall consumer prices to rise 0.2 percent in November.

A separate report showed an index of manufacturing activity in New York State rebounded in December after falling last month.

"This won't have much impact on the Fed. The Fed still has a lot of bond buying to do," said Dan Cook, a senior analyst, at IG Markets in Chicago.

U.S. stock index futures trimmed losses slightly, while Treasury bond prices pared gains. The dollar extended gains versus the yen.

The data came a day after the Fed reaffirmed its intention to purchase $600 billion worth of long-term government bonds by the end of the second quarter of 2011, saying measures of underlying inflation were somewhat low.

The U.S. central bank also noted the recovery from the worst recession since the Great Depression of the 1930s was still insufficient to lower a 9.8 percent unemployment rate.

The controversial bond buying plan is intended to stimulate demand through low interest rates, and thereby prevent prices from spiraling further down.

In the 12 months to November, consumer prices increased 1.1 percent, in line with expectations. Core CPI gained 0.8 percent, edging up from October's record low 0.6 percent rise, but staying way below the Fed's comfort zone of between 1.7 percent to 2.0 percent.

Energy prices rose only 0.2 percent last month, slowing sharply from a 2.6 percent increase in October. Food prices gained 0.2 percent, rising for a fourth straight month.

Elsewhere, new vehicle prices slipped 0.4 percent in November, extending the prior month's fall. Prices for used cars and trucks fell 0.5 percent, declining for a third straight month.

Shelter costs edged up 0.1 percent in November, the second consecutive month of gains, which should support views that rentals were stabilizing.

Apparel rebounded 0.2 percent after falling for three straight months, as retailers heavily discounted merchandise to attract shoppers.

Copyright 2010 Thomson Reuters. Click for Restrictions.