INSTANT VIEW: Consumer prices rose in July

NEW YORK (Reuters) - U.S. consumer prices rose at twice the rate expected in July to post the fastest rate of year-over-year growth in 17-1/2 years, pushed up by costlier energy and food, a government report on Thursday showed.

The number of U.S. workers filing new claims for jobless benefits fell by 10,000 last week but remained at levels that show labor markets under severe strain.

KEY POINTS:

CPI * The Labor Department said the Consumer Price Index, considered a key gauge of inflation, rose 0.8 percent in July after a 1.1 percent jump in June.

* That was far above the 0.4 percent gain that economists polled by Reuters had forecast for July.

* Prices were up 5.6 percent from a year ago, the sharpest year-over-year rise since 5.7 percent in January 1991. That was also well above the 5.1 percent increase that economists had forecast.

* Energy prices rose 4 percent in July after a 6.6 percent June gain and were up 29.3 percent on a year-over-year basis. Food costs rose 0.9 percent following a 0.8 percent June increase and put food costs 6 percent higher than a year ago.

JOBLESS CLAIMS

* The Labor Department said on Thursday initial claims for state unemployment insurance benefits dipped to a seasonally adjusted 450,000 in the week ended August 9 from an upwardly revised 460,000 in the prior week. That was still well above the 432,000 claims level that economists polled by Reuters had forecast.

* The last time that weekly claims fell was at the start of July.

* But a four-week moving average of new jobless claims, regarded as a better gauge of underlying labor trends because it irons out week-to-week volatility, climbed to 440,500 last week from 421,000 the week before. That was the highest reading in more than six years, since it hit 445,500 in April 2002.

COMMENTS:

KEITH HEMBRE, CHIEF ECONOMIST, FIRST AMERICAN FUNDS,

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