INSTANT VIEW: CPI up 5.0 pct in year

NEW YORK (Reuters) - Consumer prices in June rose by the biggest amount since 2005 on a continued surge in gasoline prices.

The Consumer Price Index advanced 1.1 percent during the month, the biggest monthly rise since September 2005, the Labor Department said. That was well above the 0.7 percent increase economists polled ahead of the report were expecting.

Prices were up 5 percent from a year ago, the biggest year-on-year rise since 1991.

Excluding food and energy prices, the so-called core CPI rose by a more tame 0.3 percent, but that rise was still higher than the 0.2 percent gain expected. Energy prices advanced 6.6 percent during the month, reflecting a 10.1 percent surge in gasoline prices as consumers are paying well in excess of $4.00 a gallon.

COMMENTS:

GARY THAYER, CHIEF ECONOMIST, WACHOVIA SECURITIES, ST.

LOUIS, MISSOURI:

"The inflation numbers were higher than expected and put the full-year inflation rate up to 5 percent, which is the high end of what we've seen since the early 1990s. This increases concern that the Fed is not going to be able to lower interest rates if the economy remains weak. And as long as the economy remains weak, it will be hard for the Fed to raise rates to fight inflation. The core inflation rate is now at 2.4 percent in the year ended in June which shows that some of the increases in commodity prices are spreading to the prices of other goods."

ALAN RUSKIN, CHIEF INTERNATIONAL STRATEGIST, RBS GREENWICH,

GREENWICH, CONNECTICUTT.:

"It really puts the Fed in a hole. The policy dilemmas are greatly increased. The core increase is not likely to be repeated. But we have to get used to the idea of 5 percent headline inflation."

JIM DEMASI, CHIEF FIXED-INCOME STRATEGIST, STIFEL NICOLAUS

& CO., BALTIMORE:

"It's a big miss in expectations. That's why we are seeing the sell-off in Treasuries. There's a battle of consensus between bulls and bears. The biggest bond negative is inflation. On the hand, there's still a lot of stress in the financial sector and a slowing economy."

"The counterbalance of these forces will keep Treasury yields from getting crushed. But this will take the steam out of the rally we had the past couple of days."

RYAN DETRICK, TECHNICAL ANALYST AT RESEARCH,SCHAEFFER'S

INVESTMENT RESEARCH IN CINCINNATI:

"The core on the CPI came in a little higher than expected. It is a concern -- inflation worries continue and this really brings that to the forefront and reinforces that inflation is running hot."

STEPHEN MALYON, SENIOR CURRENCY STRATEGIST, SCOTIA CAPITAL,

TORONTO:

"The report underscores the stagflationary environment we are in right now, which is not good for the dollar," said "There is so much uncertainty in the market right now that news of higher inflation doesn't mean a rise in interest rates."

MARKET REACTION STOCKS: US benchmark SP500 index futures little changed around 1209; BONDS: US benchmark 10-year note yield ticks up around 3.86 percent; CURRENCIES: US dollar little changed with euro around $1.5900 and yen around 104.10;

EARLIER DATA FROM JULY 16:

US mortgage applications up in 3rd straight week-MBA