U.S. consumer prices rose lower than expected in October, mainly driven by a rise in gasoline prices.

On a seasonally adjusted basis, consumer price index (CPI) rose 0.2 percent in October after rising 0.1 percent in September, the Labor Department said on Wednesday.

However, the core CPI index, which excludes volatile food and energy costs, was unexpectedly flat for a third consecutive month.

Markets had expected the core consumer prices to edge up 0.1 percent, with the overall prices index posting a 0.3 percent gain.

October's US CPI inflation figures support the stance taken by a number of Fed officials that they would have launched QE2 even if the Fed's mandate was to target price stability alone. This isn't just about a stubbornly high unemployment rate, said Paul Ashworth, an economist with Capital Economics.

In October, consumer prices went up mainly by a 4.6 percent increase in gasoline prices.

As has frequently been the case in recent months, an increase in the energy index was the major factor in the all items seasonally adjusted increase, the Department said.

Food prices further rose 0.1 percent in October following a 0.3 percent increase in September.

Food prices may have increased by only 0.1 percent m/m in October, but we know that some much bigger gains are coming soon. The surge in agricultural commodity prices over the past five months is already evident in the early stages of producer prices and it will feed through into finished consumer prices very soon, said Ashworth.

Nevertheless, we don't expect these higher commodity prices will be sustained indefinitely, let alone be followed by further price increases. For that reason, we still believe that deflation is by far the bigger threat than runaway inflation. It won't happen overnight. It took more than four years to become a reality in Japan after the asset price bubbles burst, Ashworth added.

While the prices of new vehicles fell 0.2 percent in October, used car and truck prices dropped 0.9 percent.

However, the overall consumer price index increased by 1.2 percent in October year-on-year, while the core rate was up 0.6 percent, the smallest 12-month increase in the history of the index, which dates back to 1957.

But deflation, albeit probably a very mild case, will be the inevitable consequence if the economy doesn't grow rapidly enough to absorb the excess capacity in product and labour markets, said Ashworth.