Higher energy prices pushed U.S. consumer prices higher in July, but underlying inflation came in below expectations due to a steep slide in clothing prices.

The consumer price index increased by 0.4%, after climbing 0.2% in June, the Labor Department said.

The core consumer price index, which excludes food and energy items, grew 0.2%, after rising by 0.3% in each of the preceding four months. Economists had projected a 0.4% gain in the CPI and 0.3% rise in the core.

Coming on the heels of a surprisingly restrained report on July producer prices, today’s consumer price data should provide some comfort to U.S. Federal Reserve officials that inflationary pressures aren’t taking a significant hold in the economy.

Overall consumer prices were 4.1% higher than a year earlier. Core consumer prices grew 2.7% over that period, the highest year-on-year reading since December 2001.

The report showed July energy prices up 2.9% from June. Gasoline prices increased 5.3%. Electricity prices rose 0.1%. Natural gas prices were unchanged. Food prices were up 0.2%. Services prices rose 0.3% and were up 4% compared with a year ago.

Housing prices, which account for about 40% of the overall index, were up 0.3% in July. Owners equivalent rent, a key factor in recent core consumer-price gains, rose 0.4%. Transportation prices increased 1.6%. Airfares rose 1.3%. Prices for new vehicles rose 0.1%.

Medical-care prices increased 0.2%, while education and communication prices were up 0.3%. Clothing prices were down 1.2%, the sharpest slide since 1988.

In another report Wednesday, the Labor Department said real average weekly earnings fell 0.1% in July.

Meanwhile, home construction in the United States retreated for the fifth time in six months during July.

Housing starts fell by 2.5% to a seasonally adjusted 1.795 million annual rate, the slowest pace since 1.782 million in November 2004, the Commerce Department said today. Building permits dropped the ninth time in a year. Economists had forecast housing starts down 2.2% to a 1.810 million annual rate.