15 Dec 2012

US consumer prices down

7:40 am on 15 December 2012

Consumer prices in the United States fell in November due to a sharp drop in petrol prices as inflation in the economy remained weak.

The Labor Department said the consumer price index fell 0.3% from October, the first decline since May.

The gasoline index fell 7.4% in November, which more than offset gains in prices elsewhere. Stripping out food and energy costs, "core" prices rose by 0.1% in November.

The BBC reports that over the past year, consumer prices have risen 1.8%, while core prices have increased by 1.9%.

The US economy remains fragile and the Federal Reserve on Wednesday pledged to continue buying bonds to keep actual borrowing rates low until the labour market outlook improves substantially.

Statistics suggest that much of the decline in the jobless rate since 2008 has been due to people dropping out of the workforce, either due to retirement or because they have given up seeking work.

The Federal Reserve also cut its economic outlook this week. It now expects the economy to grow between 1.7-1.8% this year, down from 1.7-2.0% it previously expected.