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Energy costs lift July inflation rate

WASHINGTON -- A new surge in energy prices pushed inflation higher in July, but other prices were more restrained, raising hopes on Wall Street that interest rates won't be increased.

The Consumer Price Index jumped 0.4 percent last month, double the June increase, the Labor Department reported yesterday. Excluding energy and food, prices rose just 0.2 percent, the smallest gain in five months.

That followed a report Tuesday that wholesale prices were up just 0.1 percent in July and, excluding food and energy, actually fell 0.3 percent.

The Dow Jones industrial average rose 96.86 points to 11,327.12, its best close in three months.

Two other reports yesterday added to the view that a slowing economy could help keep inflation in check.

The Federal Reserve said industrial production rose 0.4 percent in July, half the June gain, as manufacturing output slowed dramatically, reflecting US automakers woes.

And the Commerce Department said new home construction dropped 2.5 percent in July, the fifth decline in the past six months.

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