- The Washington Times - Wednesday, November 18, 2009

The federal government reported Wednesday that consumer prices increased slightly in October while the construction of new homes unexpectedly dropped — a sign the housing industry continues to struggle in the recession.

The Commerce Department said the construction of new homes and apartments dropped 10.6 percent last month — 529,000 compared to 592,000 in September.

Economists expected the number to increase to 600,000 and said builders were waiting to see whether lawmakers would extend a tax credit for home-buyers.

The housing market has been propped up by the tax credit — a maximum $8,000 for first-time buyers that was set to expire in November. Congress voted to extend the deadline and widen the credit to include buyers who have owned their current homes for at least five years.

The Labor Department said consumer prices increased 0.3 percent last month, exceeding economists’ projection of 0.2 percent. Core inflation, which excludes energy and food, increased 0.2 percent.

Analysts said the increases were driven by higher energy costs and the biggest price jump for automobiles in 28 years. However, the increase has not triggered concerns about inflation because prices are lower than they were last year.

Federal Reserve Bank Chairman Ben Bernanke said this week he expected inflation will remain “subdued” for some time.

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