Consumer prices surged in September by the largest amount in more than 25 years as Hurricanes Katrina and Rita sent energy prices soaring at the fastest pace on record. The Labor Department said that inflation was more moderate outside of energy and food. The so-called core rate of inflation rose by just 0.1 percent, the sixth straight month of benign readings in this area.
The Labor Department reported Friday that inflation jumped 1.2 percent last month. It said that 90 percent of that increase came from a record-setting 12 percent surge in energy prices which reflected gasoline prices that briefly topped $3 per gallon (80 cents a liter) last month after widespread shutdowns of refineries and oil and natural gas platforms along the Gulf Coast.
Meanwhile, the Federal Reserve reported that the devastating hurricanes sent output at the U.S. factories, mines and utilities plunging by 1.3 percent in September, the biggest one-month drop in more than 23 years.
The decline in industrial output was led by a 9.1 percent drop in output in the mining sector, a category that includes oil and natural gas. Output at U.S. factories fell by 0.5 percent and utility output was down 0.9 percent.
Economists and officials at the Federal Reserve are worried that the energy jolt from the Gulf Coast hurricanes could start causing more widespread inflation problems.
The sharp jump in consumer prices in September helped to push next year's cost of living adjustment for 48 million Social Security recipients to 4.1 percent, the biggest advance since 1991.
In other economic news, the Commerce Department reported that retail sales managed to post a small increase of 0.2 percent in September. However, that tiny gain came after a huge 1.9 percent plunge in retail sales in August.
The concern is that the surge in energy prices will cause consumers to cut back their spending in other areas, a development that would make the economic hit from Katrina and Rita much more severe.
Sales at gas stations were up 4 percent last month. However, much of that increase reflected the surge in pump prices rather than increased volume, the AP reports.
If gasoline sales were excluded, sales at all other retailers actually fell by 0.2 percent in September.
The 1.2 percent rise in consumer prices was far worse than analysts had expected. They had been looking for a gain of around 0.9 percent. However, core inflation was better behaved at 0.1 percent. Analysts had expected a rise of 0.2 percent in this area, which is being closely watched by policy-makers at the Fed for signs that the surge in energy costs is beginning to show up in higher prices in other areas.
The Investigative Committee of the Russian Federation put the head of the contractor company of Russia's space corporation Roskosmos, Sergei Slastikhin, on international wanted list
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