MercoPress. South Atlantic News Agency

Record low inflation in the US.

The United States consumer price index dropped 0,2% last November bringing the annual rate of underlying inflation to 1,1%, the lowest since 1966, according to the latest Commerce Department release.

A drop in fuel, clothes and air fare prices helped bring the overall consumer index down contrary to what the market was expecting.

The underlying index that includes the volatile food and energy items actually dropped 0,1% last November for the first time since December 1982.

However analysts point out that with inflation at its lowest since January 1966 the prospects of a rise in US interest rates early next year have evaporated. The Federal Reserve is expected to continue with its policy of minimum unchanged interest rate since the Fed's own forecast indicates that over the next six months inflation should grind a little bit lower".

Minutes from US Federal Reserve meetings show that members believe it was likely that "inflation will remain low for the next year or two".

Other economic data from the US shows that industrial production expanded 0,9% last November and the economy grew at an annul 8,2% rate in the third quarter. Besides there was a reduction in the current account deficit during the third quarter, dropping from 139,4 billion US dollars to 135 billion US dollars in the previous May-June quarter.

But the good prospects for the US economy have been insufficient to reverse the declining value of the US currency vis-à-vis the Euro and the Japanese Yen. Particularly the Euro that now stands at practically 1,25 US dollars.

The non official "soft" dollar policy as has been described by some European analysts is enabling the US to recover foreign markets for US exports while making the purchase of Euro or yen denominated goods far dearer.