US inflation lower than expected as housing starts fall

Bloomberg reports that US consumer prices excluding food and energy rose in October by the smallest on record.

The cost of living rose less than forecast in October and housing starts dropped, validating Federal Reserve Chairman Ben S. Bernanke’s decision to give the U.S. economy another dose of monetary stimulus.

Consumer prices excluding food and fuel, the gauge followed by central bankers, increased 0.6 percent from October 2009, the smallest gain in year-over-year data going back to 1958, the Labor Department said today in Washington...

The consumer-price index increased 0.2 percent in October from the previous month, less than the 0.3 percent gain projected by the median forecast of 80 economists surveyed by Bloomberg News. Excluding food and fuel, so-called core costs were little changed for a third consecutive month.

It is apparently difficult to get much inflation when the economy is still feeling the effects of the housing market crash, as suggested by October housing starts data.

Housing starts fell to a 519,000 annual rate, down 12 percent from a revised 588,000 in September that was lower than previously estimated, the Commerce Department report showed. Work on multifamily units, which is often volatile, plunged 44 percent, overshadowing a 1.1 percent drop in the single-family component...

Building permits, a sign of future activity, rose 0.5 percent to a 550,000 rate, less than forecast, from 547,000 in September. The stabilization in applications makes it less likely that construction will fall much more in coming months.