RTRS: US consumer inflation subdued, housing starts tumble
* Consumer prices rise 0.2 pct in Oct, less than expected
* Annual core CPI rate up 0.6 pct, smallest on record
* Housing starts fall 11.7 pct to 1-1/2 year low
* Building permits up 0.5 pct
WASHINGTON, Nov 17 (Reuters) - U.S. consumer inflation was subdued in October and new home building slumped to its lowest level in 1-1/2 years, further supporting the Federal Reserve's move to boost the sluggish economy through additional monetary easing.
The data on Wednesday could help to ease criticism of the Fed's unpopular Nov. 3 decision to inject more money into the economy through purchases of $600 billion worth of government debt.
The Labor Department said its Consumer Price Index rose 0.2 percent last month after edging up 0.1 percent in September and below economists' expectations for a 0.3 percent gain.
Excluding volatile food and energy prices, core CPI was flat for a third straight month in October and the increase from a year ago of 0.6 percent was the smallest since records started in 1957, the department said.
Economists polled by Reuters had expected core CPI to edge up 0.1 percent in October and the year-on-year rate to rise 0.7 percent after a 0.8 percent increase in September.
"Very much in line with the Fed policy initiatives suggesting that inflation right now is not a concern," said Lindsey Piegza, an economist at FTN Financial in New York. "This again gives them momentum to support their policies amid rising criticism."
In a separate report, the Commerce Department said housing starts plummeted 11.7 percent to a 519,000 annual rate from a downwardly revised 588,000 in September.
It was the weakest starts rate since 477,000 in April 2009 when the economy was still struggling with the impact of the 2007-2008 financial crisis.
Economists surveyed by Reuters had anticipated a starts rate in October of 600,000 -- far higher than the actual outcome.
Permit applications for new building edged up to 550,000 last month from an upwardly revised 547,000 in September, potentially a sign that builders hope for better times ahead.
Stock index futures held on to modest gains after the data, while U.S. government debt prices rebounded from losses. The dollar slipped against the euro and yen.
The inflation data came on the heels of a report on Tuesday that showed core producer prices recorded their biggest decline in more than four years in October as vehicle prices tumbled.
