The Labor Department's consumer price index scooted up 1 percent last month, pushed by soaring housing prices, to an annual inflation rate of 12.6 percent. The level was the same as in September, but the reason for the rise was substantially different. Much of September's increase was due to higher food prices. But October food prices rose only 0.8 percent, thanks mainly to declines in beef and fresh fruits and vegetables. Higher housing costs accounted for three-fifths of the increase in inflation. Mortgage interest rates, which had declined substantially for three months increased 1.9 percent in October. House prices were up 1.5 percent.
The report also gave the first indications that energy prices might start to rise again soon. Forecasters have been cautioning that US energy prices remain extremely vulnerable to a prolonged Iranian-Iraqi war or another round of OPEC price increases.
An accompanying report said the aftertax, inflation-adjusted earnings of a typical American city dweller with a wife and two children declined 0.6 percent, after a 0.1 percent decline in September.