The storms also knocked down industrial output and dampened the spirits of US consumers, reports showed on Friday. The storm-driven climb in gasoline prices propped up retail sales outside of autos, which fell as incentives wound down.
The increase in the consumer price index was the largest since March 1980, the Labor Department said. But outside of food and energy, prices were tame — rising a scant 0.1 percent for the fifth straight month and offering hope that broad-based inflation could be averted.
The steep energy price rise has pushed overall prices up 4.7 percent over the past year, the biggest jump since 1991.
A separate government report showed US retail sales rose a lower-than-forecast 0.2 percent last month as car sales tumbled. Outside of autos, however, sales climbed a healthy 1.1 percent, partly reflecting the big gain in gasoline prices.
US government bond prices initially rose on the mild rise in core inflation. But they later eased as analysts realized the data would not dissuade the Federal Reserve from raising interest rates to curb inflation.
The dollar slipped, while stock prices were bolstered by strong earnings from General Electric Co.
"Higher energy prices are not providing any big headwinds for the economy and inflation remains very contained," said Chris Rupkey, senior financial economist at Bank of Tokyo/Mitsubishi in New York.
Much of the country’s oil production and refining facilities were shut down by Hurricane Katrina, which slammed into the Gulf Coast on Aug. 29. The sector was dealt a further setback when Katrina’s weaker sister, Rita, hit on Sept. 24.
The blow to the US energy industry was evident in a report from the Federal Reserve that showed industrial production plummeted 1.3 percent last month, the biggest drop since January 1982.
The Fed said the two devastating storms likely cut output by about 1.7 percentage points, while a strike at aircraft maker Boeing Co. sliced off another half-point — implying production otherwise might have risen a robust 0.9 percent.
Consumer spirits — if not their shopping habits — have also been dealt a blow by the storms and related surge in gasoline prices.
The University of Michigan’s preliminary index of consumer sentiment fell unexpectedly in early October to its lowest level in 13 years, extending a September decline, according to sources who saw the subscriber-only report.
The consumer price report showed energy prices leaped 12 percent last month, the biggest advance on records dating to 1957. Gasoline prices, which hit an all-time high in the week after Katrina struck, jumped a record 17.9 percent, while natural gas and fuel oil costs each rose more than 12 percent.
Over the past 12 months, energy costs have climbed 34.8 percent, the biggest 12-month gain in more than 25 years.
Gasoline prices are up more than 50 percent.
Those soaring energy costs have hit household pocketbooks hard, knocking inflation-adjusted average weekly earnings down 1.2 percent last month, according to a separate Labor Department report.
Still, analysts said the retail sales gain showed consumers undaunted.
The Commerce Department said the 0.2 percent increase in sales in September came in the face of a 2.8 percent drop in automotive sales, despite dealer incentives.
But the 1.1 percent exauto sales gain exceeded analysts’ expectations. While that rise partly reflected a 4 percent increase in gas station sales pinned on higher prices, sales outside of the volatile auto and gasoline sectors notched a healthy 0.6 percent advance.
Rupkey said that showed "consumer spending has not been dented by the hurricane-inspired rise in gasoline prices and fears of higher home heating oil bills."
