U.S. consumer prices increased last month in line with expectations due to higher energy prices, but the gain was muted when volatile energy and food sectors were excluded.

Meanwhile, home construction climbed a second time in a row during December and a sign of future groundbreakings increased for first time in nearly a year.

The consumer price index was up 0.5%, the U.S. Labor Department said today, after showing no change in November. Excluding food and energy prices, core consumer prices rose 0.2%. The core figure was flat the previous month.

The inflation numbers were exactly in line with Wall Street expectations.

Consumer prices were 2.5% higher than a year earlier, the lowest annual rate since 2003. However, core prices rose 2.6% for 2006 as a whole, up from 2.2% in 2005 and the fastest yearly core inflation rate since 2001.


Meanwhile, housing starts increased by 4.5% to a seasonally adjusted 1.642 million annual rate in December, the U.S. Commerce Department said today. The government slightly lowered its original estimate for November starts. Construction rose by 6.4% to 1.572 million in November, revised from an originally reported 6.7% climb to 1.588 million. Starts were 18.0% below the level 12 months earlier.

Wall Street economists had expected a decrease in starts during December.


Separately, new claims for unemployment insurance decreased by 8,000 to 290,000 in the week ended Jan. 13, the U.S. Labor Department said today, the lowest level since Feb. 18, 2006, and the second-straight week that claims have been below the 300,000 threshold.

Economists consider claims levels consistently below 300,000 as consistent with very tight labor markets. The prior week’s reading was revised to 298,000 from a previously reported level of 299,000.