INSTANT VIEW: Consumer prices rise faster than expected

NEW YORK (Reuters) - U.S. consumer prices rose at a slightly faster-than-expected 0.7 percent pace in June, but the bulk of the increase was due to soaring gasoline prices and the core measure of inflation remained relatively tame, government data on Wednesday showed.

The slumping factory sector in New York state nearly pulled out of contraction in July, posting a highest reading in more than a year as new orders jumped, the New York Federal Reserve said on Wednesday.

KEY POINTS:

CPI * The Labor Department said the rise in the Consumer Price Index was the largest since July 2008. Wall Street analysts polled by Reuters had forecast a 0.6 percent increase, compared with the 0.1 percent gain reported in May. * Gasoline prices jumped 17.3 percent last month, the largest increase since September 2005, and explained the bulk of the increase in the headline index, the Labor Department said. * Compared to the same period last year, consumer prices fell by 1.4 percent, which was the biggest decline since January 1950, when prices fell 2.1 percent, a Labor Department official said. Gasoline prices compared with a year ago were 34.6 percent lower.

EMPIRE STATE * The New York Fed's "Empire State" general business conditions index rose to minus 0.55 in July from minus 9.41 in June. * July's result was the strongest since April 2008's 0.81, which was the last time it was in positive territory. The was also much better than economists' expectations of minus 5.0, based on the median of forecasts in a Reuters poll. * The new orders index jumped to 5.89 from June's minus 8.15, reaching its highest since December 2007.

COMMENTS:

GARY THAYER, SENIOR ECONOMIST, WELLS FARGO ADVISORS, ST. LOUIS, MISSOURI:

EMPIRE: "The number was a decent number, showing that in the New York region, manufacturing was only slightly contracting in July. We saw some positive numbers on orders and shipments, the first we had seen in a long time, which suggests that maybe the manufacturing sector is turning a corner. It's still a tentative sign, but consistent with other reports showing that the recession may be near an end.

CPI: "An increase in gasoline prices lifted the overall CPI number. With the better economic news, there's some renewed concern about inflation down the road, but nothing in today's CPI report suggests an imminent inflation problem."