U.S. inflation accelerated in June, fuelled higher by surging energy prices, according to government figures released today.

The consumer price index (CPI) rose by 1.1% in June, the U.S. Labour Department said, more than the 0.7% many analysts had expected.

It was the second-highest increase since 1982 and the highest since 2005.

Excluding food and energy, the CPI advanced 0.3%. Economists had expected a 0.2% rise in the core rate.

High inflation will make it harder for the U.S. Federal Reserve Board to cut interest rates and boost an economy hurt by a housing market slump.

On annual basis, prices were 5% higher when compared with June 2007, the U.S. Labour Department said.

Energy prices were the main driver of price growth, and were 6.6% higher in June as the cost of gasoline, natural gas and heating oil increased.

The annual core inflation rate, which strips out volatile fuel and food prices, was 2.4%.

In a separate report, the U.S. Labour Department said the average weekly earnings of U.S. workers, adjusted for inflation, fell 0.9% in June, suggesting incomes aren’t keeping pace with prices.

Meanwhile, industrial production increased 0.5%, following an unrevised 0.2% drop in May, the Federal Reserve said today..

Capacity utilization increased to 79.9% in June. May capacity use was 79.6%, revised up from an originally reported 79.4%. The 1972-2007 average is 81.0%.

Economists expected industrial production to rise 0.2% in June, with a capacity utilization rate of 79.4% for the month.

Over the 12 months ending in June, industrial production was 0.3% higher.