Jan. 18 (Bloomberg) -- U.S. consumer prices accelerated in December for the first time in four months, suggesting the easing of inflationary pressures that the Federal Reserve is counting on will be slow.

The consumer price index increased 0.5 percent last month, the most since April and reflecting higher costs for gasoline and natural gas, after no change in November, the Labor Department said today in Washington. Excluding food and energy, so-called core consumer inflation rose 0.2 percent, following no change a month earlier.

The figures come on the heels of slower economic growth in the last half of 2006 that will allow Federal Reserve policy makers the luxury of holding interest rates steady this quarter, economists said. San Francisco Fed Bank President Janet Yellen said yesterday that rates may be high enough to slow inflation.

``For now, core inflation is tame enough for the Fed to be able to sit back and wait and see what happens,'' said Jim O'Sullivan, senior economist at UBS Securities LLC in Stamford, Connecticut.

Federal Reserve Bank of Cleveland President Sandra Pianalto said the central bank's Open Market Committee may still need to take action should inflation fail to keep slowing.

``It is difficult to know where the inflation trend will settle out,'' Pianalto said at a speech in Dayton, Ohio today. ``There is still a risk that the underlying inflation trend will not continue to improve, in which case, the FOMC will need to respond with the appropriate policy actions.''

Economists' Forecasts

Economists expected the consumer price index to rise 0.4 percent, according to the median of 74 forecasts in a Bloomberg News survey. Estimates ranged from increases of 0.1 percent to 0.6 percent.

The report follows figures yesterday showing producer prices rose more than forecast in December, reflecting higher costs for crude oil and gasoline that have since declined. Economists said that the jump in wholesale inflation would prove temporary because crude-oil prices have fallen about 20 percent since mid-December.

The warmest December since 1957 helped spark an unexpected surge in homebuilding during the month, the Commerce Department also reported today. Housing starts increased 4.5 percent to an annual rate of 1.642 million in December.

More Building Permits

Building permits, which are considered gauge of future building activity, increased by the most in four years, suggesting the worst of the construction slump is over.

The Labor Department also reported today that initial jobless claims unexpectedly declined to the lowest level in 11 months.

Excluding food and energy costs, the consumer price index was forecast to rise 0.2 percent, according to the Bloomberg survey. Estimates ranged from no change to 0.3 percent.

Average weekly wages adjusted for inflation fell 0.1 percent in December, the first decline since August, after rising 0.3 percent, a separate report from the Labor Department showed.

Consumer prices rose 2.5 percent from December 2005, compared with a 2 percent year-over-year gain the prior month. Core consumer prices rose 2.6 percent during the 12 months ended in December, matching the 12-month increase in November. In September, the year-over-year increase of 2.9 percent was the biggest since 1996.

Higher Energy Costs

Energy prices jumped 4.6 percent in December, the biggest since January, after a 0.2 percent decline the month before. Gasoline prices increased 8 percent, the most since April 2006, following a 1.6 percent decrease for November. Fuel-oil costs rose 4.3 percent and natural gas prices increased 3.9 percent.

Retail prices for unleaded gasoline averaged $2.31 a gallon in December, up from $2.23 a gallon in November, according to U.S. Energy Department figures. Prices have since reversed.

The consumer price index is the government's broadest gauge of costs for goods and services. Almost 60 percent of the CPI covers prices consumers pay for services, ranging from medical visits to airline fares and movie tickets.

New vehicle prices fell 0.2 percent, while clothing costs rose 0.6 percent. The price of airfares dropped 2.4 percent in December. The cost of air travel may increase in January.

Major U.S. airlines implemented at least 10 broad fare increases last year to help offset rising fuel costs. Continental Airlines Inc. US Airways Group Inc. last week raised round-trip fares by as much as $10, matching increases made by UAL Corp.'s United Airlines and other large U.S. carriers in this year's first general fare boost.

Food Prices

Food prices, which account for about a fifth of the CPI, were unchanged in December after a 0.1 percent decline in November. The cost of food may start to increase after a report yesterday showed a jump in prices at the wholesale level.

New York-based PepsiCo Inc. in November announced plans to raise prices for the second time in two months. Atlanta-based Coca-Cola Co. raised retail prices for its Simply Orange and Minute Maid juice four times in 2006.

Housing costs, which include some energy costs and account for one-third of the total consumer price index, rose 0.4 percent for a second month. A category designed to track rental prices increased 0.3 percent for a second month.

Rising rents, which make up almost 40 percent of the core CPI, have been contributing to inflation as less affordable home prices make renting more attractive.

Medical Care

The cost of medical care rose 0.1 percent after a 0.2 percent rise.

Government figures last month showed that the Fed's preferred measure of core consumer inflation, reported by the Commerce Department, rose 2.2 percent in November from a year earlier, the smallest year-over-year gain since May. The index was still above the upper end of Fed Chairman Ben S. Bernanke's ``comfort'' range of 1 percent to 2 percent.

Policy makers left their benchmark lending rate at 5.25 percent for a fourth straight meeting in December.

``I do want inflation to move down, but I believe policy may now be well-positioned to foster exactly such an outcome,'' Yellen said yesterday. ``While I am inclined to see labor-market tightness as transitory, I do take it as a serious risk.''

Rising wages and a burst of consumer spending last month show an economy that regained some of its footing heading into 2007, after growth slowed in the third quarter, economists said.

A government report last week showed U.S. retailers had a better holiday shopping season than many economists had forecast. December retail sales rose by the most in five months.

Economists at Barclays Capital Inc., Lehman Brothers Holdings Inc. and Goldman Sachs Group Inc. raised their estimates for fourth-quarter economic growth after the report.

``Fundamentals around inflation, such as a relatively tight labor market and decent growth figures, all argue against near- term rate cuts by the Fed,'' Drew Matus, a senior economist at Lehman Brothers, said in a note to clients.

To contact the reporter on this story: Joe Richter in Washington at Jrichter1@bloomberg.net

Last Updated: January 18, 2007 09:04 EST