(Adds details, market reaction, analyst comment)
By Mark Felsenthal
WASHINGTON, Dec 14 (Reuters) - U.S. consumer prices jumped a bigger-than-expected 0.8 percent in November, the sharpest climb in more than two years and driven by surging energy costs, a government report released on Friday showed.
The Consumer Price Index, the most broadly used gauge of inflation, rose at the fastest rate since September 2005, as energy costs jumped 5.7 percent, a Labor Department report said. Analysts polled by Reuters were expecting a 0.6 percent rise in the CPI.
Energy accounted for nearly 70 percent of this month’s increase in the CPI, a Labor Department official said.
Even so, core prices, which strip out volatile food and energy costs, were up 0.3 percent, the biggest jump since the same increase in January. Analysts were expecting a 0.2 percent rise in core prices.
Consumer prices were also 4.3 percent higher than a year ago, the steepest increase since a matching gain in June 2006 and above the 4.1 percent rise forecast by economists.
But stripping out food and energy, prices were up 2.3 percent from November 2006, which was in line with expectations.
During November, gasoline prices rose a seasonally adjusted 9.3 percent, the steepest climb in six months. They have risen 37.1 percent over the past 12 months, the biggest one-year rise in more than two years.
So far this year, energy costs have advanced at a 18.1 percent annual rate, six times faster than the 2.9 percent rise for all of 2006.
Prices for U.S. government bonds fell as did stock index futures after the higher-than-expected inflation data, which suggested mounting price pressures may make it harder for the Federal Reserve to lower interest rates to help the economy weather financial turmoil and the housing slump.
“It all shows that prices pressures exist in the United States,” said Marc Chandler, senior currency strategist for Brown Brothers Harriman in New York.
Reporting by Mark Felsenthal, editing by Joanne Morrison