WASHINGTON (AP) — Consumer prices shot up in July at twice the expected rate, pushed higher by surging energy and food costs. The latest surge left inflation running at the fastest pace in 17 years.

The Labour Department reported yesterday that consumer prices rose by 0.8 percent last month, twice the 0.4 percent gain that economists had been expecting.

It marked the third straight month of oversized inflation increases following jumps of 0.6 percent in May and 1.1 percent in June. And it leaves inflation rising by 5.6 percent over the past year, the biggest 12-month gain since January 1991.

Core inflation, which excludes volatile food and energy costs, rose 0.3 percent in July, slightly higher than the 0.2 percent increase that economists had expected. For the past 12 months, core inflation has risen by 2.5 percent, the highest 12-month change since February.

The inflation surge presents a major problem for the Federal Reserve: Will inflation force it to start raising interest rates even as the economy struggles to avoid a recession?

Some economists said they believed this could be the last truly horrible inflation report, noting that energy prices have been falling since hitting a peak last month. Others worried that the July report could be a signal that inflation is not going to moderate as quickly as had been expected because the surge in energy prices is now starting to spread to other sectors of the economy.

"The battering of consumers continues as prices are rising for just about everything," said Joel Naroff, chief economist at Naroff Economic Advisors. "If you think things are going to get a lot better with the drop in petroleum prices, think again. The increases (in July) were broad-based."

The core inflation figure was driven higher by a big 1.2-percent jump in clothing costs, the biggest increase in this area since August 1998. Airline ticket prices, which have been surging because of higher fuel costs, jumped another 1.3 percent in July.

The big rise in inflation left consumers even more squeezed. The Labour Department said that average weekly earnings, after adjusting for inflation, fell by 3.1 percent in July compared to a year ago, the biggest year-over-year decline since November 1990.