WASHINGTON, Nov 18 (Reuters) - U.S. consumer prices held steady last month as plunging energy prices offset increases in the cost of food, homes and lodging, the government said on Tuesday in a report that showed little change in inflation trends.

The consumer price index, the most widely used gauge of U.S. inflation, was unchanged in October, the Labor Department said. The so-called core index, which strips out sometimes volatile food and energy prices, rose 0.2 percent.

Markets largely shrugged off the data, which came was close to expectations. Economists had expected both the overall CPI and the core index to rise 0.1 percent.

Analysts said the report showed a lack of inflation and suggested the Federal Reserve could keep overnight borrowing costs at a 1958 low of 1 percent for some time to try to spur employment growth without worrying about prices flaring. San Francisco Fed President Robert Parry, speaking in Tucson, Arizona, suggested the central bank could afford to be patient on rates because inflation was unlikely to rise much with joblessness high and a high rate of unused industrial capacity.

"I think there's still room for some pretty strong growth before the risk of inflationary pressures becomes a primary concern," he said.

The CPI report showed energy prices plunged 3.9 percent in October, reversing course after big gains in the prior two months, as gasoline, natural gas, fuel oil and electricity prices all fell sharply.

Food prices rose a steep 0.6 percent, reflecting the biggest advance in beef prices in nearly 25 years. A ban on imports of Canadian beef, put in place after Canada discovered one case of mad cow disease earlier this year, have driven prices higher, analysts say.

The 0.2 percent gain in the core CPI marked a bit of an acceleration from September, when core prices inched up just 0.1 percent.

The department said the biggest factor behind the pickup in core prices was a rise in "shelter" costs, including a 2.3 percent spike in lodging and a 0.3 percent gain in the cost of owning a home.

The 12-month change in the core index ticked up to 1.3 percent from the 1.2 percent in September, which was the slowest rate in over 37-1/2 years.

The low core inflation rate reflects a slowdown in price gains that appear to have bottomed out earlier this year.