MercoPress. South Atlantic News Agency

US economic data gradually improving

United States consumer prices dropped 0.5% in October on the back of cheaper oil for the second month in a row according to the latest release from the Labor Department.

Energy costs, particularly oil prices that had surged on political tensions and supply problems earlier in the year, were down by 7% in October. Annual inflation rate now stands at 1.3%.

However the annual rate of core inflation, which does not include volatile food and energy prices, was 2.7% in October, after having climbed 0.1% in that month.

In related data, the Federal Reserve said that industrial production had edged ahead in October, despite a 3.9% fall in auto production.

Overall industrial output from factories, mines and utilities climbed 0.2% after a 0.6% slump in September.

Based on this data analysts believe the Federal Reserve which has kept interest rates on hold at 5.25% since August is unlikely to change its stance at its last meeting this year.

The Treasury Department also revealed that the budget deficit in October reached 49.29 billion US dollars in line with market expectations and almost unchanged from October 2005, with 47.3 billion US dollars.

October was the first month of fiscal 2007 and according to the Treasury Department since 1954 October has always been on the red.

Outlays and revenue last October were also considerably up: 216.9 billion US dollars compared to 196.7 billion a year ago; and 167.7 billion against 149.5 billion in October 2005.

The previous revenue record was October 2001 and outlays October 2003 with 205 billion US dollars.

Fiscal 2006 ended with a 248.2 billion US dollars deficit, the lowest in four years.

Democrats who gained control of Congress have promised to further cut the budget deficit but analysts are not so convinced because of the war on terrorism and the historic tradition of Democrats to increase expenditure in domestic programs.