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Consumer Prices Rise More Than Expected

(CNBC/Reuters) U.S. consumer prices rebounded more than expected in October and underlying inflation picked up, which together with abating trade tensions and fears of a recession, support the Federal Reserve’s signal for no further interest rate cuts in the near term.

The Labor Department said on Wednesday its consumer price index increased 0.4% last month as households paid more for energy products, healthcare, food and a range of other goods. That was the largest gain in the CPI since March and followed an unchanged reading in September.

In the 12 months through October, the CPI increased 1.8% after climbing 1.7% in September.

Stable inflation comes on the heels of fairly upbeat data, including better-than-expected job growth in October and an acceleration in services sector activity.

There has also been an de-escalation of trade tensions between the United States and China. President Donald Trump on Tuesday said Washington was close to signing a “phase one” trade deal with Beijing, but provided no new details.

While the 16-month U.S.-China trade war is weighing on the manufacturing industry, the household sector remains solid.

In October, energy prices jumped 2.7% after falling 1.4% in the prior month. Energy prices accounted for more than half of the increase in the CPI last month.

Gasoline prices rebounded 3.7% after declining 2.4% in September. Food prices rose 0.2%, rising for a second straight month. Food consumed at home gained 0.3%.

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