US prices plummet as oil retreats

Petrol prices are continuing to fall

US consumer prices fell 0.6% in November, marking the sharpest slide in 56 years, official figures show.

The fall was driven by a record 8% drop in energy costs in the month, following a previous surge in oil prices in the wake of Hurricane Katrina.

Analysts had been expecting a 0.4% fall in US consumer prices.

The larger decline will come as some relief to the US Federal Reserve, which has been raising interest rates in a bid to dampen inflationary pressures.

Earlier this week the US central bank increased its base rate by a quarter-point to 4.25% - the 13th consecutive rise.

Cheaper fuel

It's a good decline in prices for a change - it appears the big drop in energy prices during November has brought the overall inflation rate down considerably Gary Thayer, chief economist AG Edwards & Sons

Excluding food and energy costs, the so-called 'core' measure of US inflation rose in-line with forecasts by 0.2% in November.

Over the past year, US consumer prices have climbed by 3.5%, the US Labor Department reported.

November's steep fall in consumer prices was fuelled by a 16% drop in the cost of petrol (gasoline) - the sharpest monthly fall since records began in 1967.

Fuel oil costs fell by 6.1%, while natural gas prices fell by 0.5%, the Labor Department said.

"It's a good decline in prices for a change," said economist Gary Thayer, at AG Edwards & Sons.

"It appears the big drop in energy prices during November has brought the overall inflation rate down considerably."

Separate figures have suggested that the US economy is continuing to expand.

US economic growth accelerated to an annual rate of 4.3% in the three months from July to September, according to revised Commerce Department figures released last month.

There had been fears that the cost of rebuilding after hurricanes Katrina and Rita, coupled with record oil prices, would slam the brakes on growth.