U.S. consumer prices rose in September at the fastest pace in more than 25 years, buoyed by surging energy prices.

The consumer-price index jumped1.2% in September, its biggest increase since March 1980, after rising 0.5% in August.

More than 90% of the rise was due to energy prices, which were up a record 12%, the U.S. Labor Department said today.

The closely watched core index, which excludes food and energy items, rose 0.1% for the fifth straight month. The core index rose at a seasonally adjusted annual rate of 2.0% as of September, down from a 2.1% gain as of August.

Economists had expected surging gasoline prices in the wake of hurricanes Katrina and Rita to boost overall energy prices and overall consumer prices in September.

September’s inflation numbers are likely to reinforce expectations that the Federal Reserve will raise the federal-funds rate further at its upcoming November 1 meeting.

Meanwhile, U.S. industrial production dropped last month by the most in more than two decades amid disruptions from hurricanes Katrina and Rita, the Federal Reserve said today.

Industrial production declined 1.3% last month, the biggest drop since January 1982, when it fell 1.9%. September industrial capacity utilization was reported at 78.6%, down from August’s unrevised 79.8%. Economists had expected industrial production to fall 0.4% and capacity utilization to dip to 79.3%.

In another report issued today, the U.S. Commerce Department said U.S. retail sales rose mildly during September, propped up by ballooning gas prices that countered flagging demand for cars. Retail sales increased a seasonally adjusted 0.2%, after falling a revised 1.9% in August. Sales were originally seen declining 2.1% in August.

The Commerce Department said it could not isolate the effects of hurricanes Katrina and Rita on retail sales estimates in today’s report.