WASHINGTON (Reuters) - U.S. consumer prices increased by the most in nine months in October amid gains in the cost of gasoline and rents, pointing to steadily rising inflation that likely will keep the Federal Reserve on track to raise interest rates again next month.

Though overall inflation could slow in the months ahead following a recent slump in oil prices, economists said Fed officials were likely to regard any retreat as temporary and focus on underlying price pressures.

The U.S. central bank, which has a 2 percent inflation target, left interest rates unchanged last Thursday after a two-day policy meeting. In its policy statement, the Fed noted that annual inflation measures “remain near 2 percent.”

“Fed officials are likely to look past the swings in energy prices that could slow the overall CPI in coming months to see further upward pressure on underlying prices,” said Ben Ayers, senior economist at Nationwide in Columbus, Ohio. “As such, we still expect the Fed to raise interest rates in December.”

The Labor Department said on Wednesday its Consumer Price Index rose 0.3 percent last month, the biggest gain since January, after edging up 0.1 percent in September. In the 12 months through October, the CPI increased 2.5 percent, picking up from September’s 2.3 percent rise.

Excluding the volatile food and energy components, the CPI climbed 0.2 percent. The so-called core CPI had gained 0.1 percent for two straight months. In the 12 months through October, the core CPI increased 2.1 percent after advancing 2.2 percent in September.

Economists polled by Reuters had forecast the CPI climbing 0.3 percent and the core CPI gaining 0.2 percent in October.

FILE PHOTO - Price tags are seen at a Men's Wearhouse store in Pasadena, California June 25, 2013. REUTERS/Mario Anzuoni

The dollar .DXY was weaker against a basket of currencies after touching a 16-month high earlier this week while U.S. Treasury yields fell. Stocks on Wall Street initially rose on the inflation data and a rebound in oil prices, which tumbled more than 7 percent on Tuesday, before moving lower.

Oil prices have lost more than a quarter of their value since early October amid a surge in supply and increasing concerns about an economic slowdown. The drag on inflation from oil prices is likely to be offset by a tightening labor market, which is spurring faster wage growth.

The unemployment rate is at nearly a 49-year low of 3.7 percent and annual wage growth recorded its largest increase in 9-1/2 years in October.

“In the medium- to longer-run we believe this increase in wage growth will both push up business costs as well as support demand, leading to firming price inflation,” said Michael Feroli, an economist at JPMorgan in New York. “In the shorter-run, however, the consumer price outlook will be challenged by the stronger dollar and weaker energy prices.”

CHEAPER FOOD

The Fed’s preferred inflation measure, the personal consumption expenditures (PCE) price index excluding food and energy, increased 2.0 percent for five straight months. Economists believe the core PCE price index slipped just below 2.0 percent in October. The government will publish the PCE price index data at the end of the month.

“Core inflation that is close to but just below target will not prevent the Fed from raising rates in December,” said Andrew Hollenhorst, an economist at Citigroup in New York. “However, it strengthens the argument that aggressive hikes are unnecessary despite continued strong growth.”

Last month, gasoline prices rebounded 3.0 percent, accounting for more than one-third of the increase in the CPI, after slipping 0.2 percent in September.

Food prices fell 0.1 percent after being unchanged in September. Food consumed at home declined for a second straight month in October, held down by cheaper bread, cereals, pork, dairy products, fruits and vegetables.

Owners’ equivalent rent of primary residence, which is what a homeowner would pay to rent or receive from renting a home, rose 0.3 percent in October after advancing 0.2 percent in the prior month.

Healthcare costs increased 0.2 percent last month after a similar gain in September. Apparel prices edged up 0.1 percent after jumping 0.9 percent in September.

There were also increases in the costs of household furnishings and used motor vehicles and trucks as well as motor vehicle insurance and tobacco.

But prices for new motor vehicles dropped 0.2 percent last month. Communications costs fell as did prices for recreation and personal care products.