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Washington - US consumer prices were flat in September as the credit crisis and falling energy costs curbed inflation, government data showed on Thursday.
The Labour Department's consumer price index (CPI) showed a second consecutive tame reading after a 0.1% decline in August.
The reading compared with analyst forecasts for a 0.1% rise in prices.
The so-called core index which excludes food and energy showed a 0.1% increase after a 0.2% rise in August.
Over the past 12 months, consumer prices have risen 4.9% overall and 2.5% excluding food and energy.
A major factor in the report was a 1.9% drop in overall energy costs, reflecting the sharp drop in crude oil from record highs hit in July.
Food costs however rose 0.6% while housing and apparel prices each fell 0.1%.
Ian Shepherdson, chief US economist at High Frequency Economics, said inflation is rapidly fading as prices plummet in the face of weak economic conditions.
Inflation surge fears ease
He said that gasoline prices fell a modest 0.6% in September "but it is already clear October gas prices will plunge; our current forecast is for a massive 18% drop."
"Food prices continue to trend strongly upwards, with a 0.6% September gain. But with global food prices having dropped sharply in recent weeks, there should be some relief over the next few months," Shepherdson said.
Many analysts say the surge in inflation earlier this year, which raised fears of stagflation, has now faded in the face of economic blows from a global credit crisis.
The Federal Reserve earlier this month cut its base rate a half-point to 1.5%, reversing its posture leaning toward a rate hike to curb inflation earlier in the year.
Some say the Fed may have to cut rates further to jump-start a moribund economy that will push prices down further.
"The combination of rising unemployment, restrained household spending and weak industrial production are a toxic mix for inflation," said Joseph LaVorgna, economist at Deutsche Bank.
"As these conditions worsen in the coming months - as we believe they will - price pressures will face significant downdrafts."
- AFP