Published on ShanghaiDaily.com (http://www.shanghaidaily.com/)
http://www.shanghaidaily.com/sp/article/2008/200812/20081217/article_384776.htm
US cost of living at new low
Created: 2008-12-17
Author:Bob Willis
THE cost of living in the United States fell in November by the most on record as gasoline and other energy prices plunged.
Consumer prices dropped 1.7 percent last month, more than economists had forecast, a Labor Department report showed yesterday in Washington. Excluding food and energy, so-called core prices were unchanged from a month earlier.
Costs of oil and other raw materials plummeted last month as the credit crisis intensified, forcing consumers to slash spending and prompting US auto makers to ask for a federal rescue package. Tumbling sales have retailers cutting prices, bolstering economists' expectations that the Federal Reserve will cut its target rate to the lowest level ever.
"The prospect of the longest recession in over 50 years and evidence that overall inflation is moderating should persuade the Fed to take all actions necessary to keep credit flowing and to mitigate the economic downturn," Dana Saporta, an economist at Dresdner Kleinwort in New York, said.
A separate government report yesterday showed that builders broke ground on the fewest new homes since record-keeping began in 1959. Housing starts fell 18.9 percent in November to an annual rate of 625,000, the Commerce Department said.
Treasuries, which had risen earlier in the day, remained higher after the reports. Futures contracts on the Standard & Poor's 500 Stock Index advanced, gaining 0.7 percent.
Consumer prices were forecast to fall 1.3 percent, according to the median forecast of 71 economists in a Bloomberg News survey. Estimates ranged from a decline of 1.7 percent to a drop of 0.4 percent.
Costs excluding food and energy were forecast to rise 0.1 percent, the survey showed.
The monthly drop in the CPI was the biggest since the Labor Department's records began in 1947.
Prices increased 1.1 percent in the 12 months to November, after a year-over-year gain of 3.7 percent in October. They were forecast to climb 1.5 percent from a year earlier, according to the survey median.
Energy costs dropped 17 percent, the most since 1957, the report said. Gasoline prices plunged 29.5 percent, and fuel oil costs fell 14.6 percent.
Consumer prices dropped 1.7 percent last month, more than economists had forecast, a Labor Department report showed yesterday in Washington. Excluding food and energy, so-called core prices were unchanged from a month earlier.
Costs of oil and other raw materials plummeted last month as the credit crisis intensified, forcing consumers to slash spending and prompting US auto makers to ask for a federal rescue package. Tumbling sales have retailers cutting prices, bolstering economists' expectations that the Federal Reserve will cut its target rate to the lowest level ever.
"The prospect of the longest recession in over 50 years and evidence that overall inflation is moderating should persuade the Fed to take all actions necessary to keep credit flowing and to mitigate the economic downturn," Dana Saporta, an economist at Dresdner Kleinwort in New York, said.
A separate government report yesterday showed that builders broke ground on the fewest new homes since record-keeping began in 1959. Housing starts fell 18.9 percent in November to an annual rate of 625,000, the Commerce Department said.
Treasuries, which had risen earlier in the day, remained higher after the reports. Futures contracts on the Standard & Poor's 500 Stock Index advanced, gaining 0.7 percent.
Consumer prices were forecast to fall 1.3 percent, according to the median forecast of 71 economists in a Bloomberg News survey. Estimates ranged from a decline of 1.7 percent to a drop of 0.4 percent.
Costs excluding food and energy were forecast to rise 0.1 percent, the survey showed.
The monthly drop in the CPI was the biggest since the Labor Department's records began in 1947.
Prices increased 1.1 percent in the 12 months to November, after a year-over-year gain of 3.7 percent in October. They were forecast to climb 1.5 percent from a year earlier, according to the survey median.
Energy costs dropped 17 percent, the most since 1957, the report said. Gasoline prices plunged 29.5 percent, and fuel oil costs fell 14.6 percent.
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