July Consumer Prices Rise 0.1%

The consumer price index, one of the most closely watched indicators of inflation, rose 0.1% in July for the second straight month, sparked by higher gasoline and health care costs, the Commerce Department said Friday.

Excluding the volatile food and energy sectors, the "core" index rose 0.2% after rising 0.1% the prior month.

Trucking is extremely sensitive to inflationary pressures.

Consumer prices are running at a 2.5% annual rate, compared with a 2.7% pace in the same seven months last year, Commerce said.

Economists expected a 0.2% increase in the consumer price index and the "core" index, Bloomberg said.

The report showed energy prices rose 0.4% in July and gasoline prices rose 1.5% and medical care costs increased 0.7%. New car prices and clothing costs both declined.

owever, analysts told Bloomberg, prior to the report, that demand isn't strong enough across the economy to cause a sustained inflationary pickup. .

If overall U.S. inflation rates were to rise too fast, it would inhibit the Federal Reserve from further cutting interest rates.

In another report from Commerce, starts of housing construction fell 2.7% in July to 1.649 million housing units at an annual rate from a revised pace of 1.695 million. Economists had expected starts to hold steady in July, Bloomberg said.

The rate in July still surpasses the number of homes started in 2001, the third year in the past decade in which starts exceeded 1.6 million.

Starts fell in the Northeast, South and West, and rose in the Midwest.

The report also noted building permits, an indicator of future construction, fell 0.5% to 1.698 million units at an annual rate last month.