American inflation slumps to its weakest rate for 53 years

CORE US inflation fell to an annual rate of just 0.6 per cent in October, according to data released yesterday by the Labor Department.

This is the lowest 12 month increase in the 53 year history of the index.

The Consumer Price Index (CPI) “less food and energy” recorded no increases at all for the third month in a row.

Energy prices, however, continued to soar, increasing by an average of 2.6 per cent, while energy commodities (such as gasoline and fuel oil) increased by 4.4 per cent.

The CPI has now shown energy prices increasing for four successive months, since July.

However, prices on these items remain volatile. On average energy items only increased by 0.7 per cent in September, yet this rate shot back up to 2.6 per cent last month.

The CPI charts price changes of goods and services purchased by US households, surveying 4,000 housing units and approximately 25,000 retail establishments.

The news came as the US Commerce Department announced a 11.7 per cent fall in housing construction, the lowest the figures have been for 18 months and below predictions. The fall leaves the annual housing construction rate at 519,000 units.

And on Tuesday core US producer prices recorded their biggest fall in over four years, after large declines in vehicle prices.