Food cost were up, but lower gas prices helped to move inflation to the small increase in five months.

The Labor Department reported Wednesday that the Consumer Price Index edged up a virtually minuscule 0.2 percent in June following a 0.7 percent surge in May, which had been the biggest jump in 20 months.

The price moderation reflected a 1.1 percent decline in gasoline prices, which pushed total energy costs down by 0.5 percent, offsetting a 0.5 percent rise in food costs.

In other economic news, construction of new homes rose in June following two straight months of declines, the Commerce Department reported.  The 2.3 percent increase in construction activity was better than the small decline that analysts had expected. It pushed home building to a seasonally adjusted annual rate of 1.434 million units.

Core inflation, which excludes the volatile energy and food sectors, was also moderate in June, rising by just 0.2 percent. Through the first six months of this year, core inflation has been rising at an annual rate of 2.3 percent, down from a 2.6 percent rate of increase in the last half of 2006, indicating that the surge in energy and food costs are not becoming embedded in more widespread inflation problems.