MercoPress. South Atlantic News Agency

Energy and food push US inflation to highest in 17 years

Inflation in United States for all of 2007 hit the highest rate for 17 years as surging energy and food costs pushed up prices according to the US Labor Department latest release.

Consumer prices rose by 4.1% for all of 2007, up sharply from a 2.5% increase in 2006. The figures also showed consumer prices rose by 0.3% in December, down from November's increase of 0.8%. Energy prices jumped 17.4% in 2007, while food prices rose 4.9%, their biggest increase since 1990. Apparel was the only category to see a fall in price over 2007, with clothing prices down 0.3%. However, excluding volatile food and energy costs, core prices rose 0.2% in December and showed a 2.4% rise for all of 2007 - down from 2.6% in 2006. However economists said that the inflation data was unlikely to deter the US Federal Reserve from cutting interest rates aggressively at its next meeting at the end of the month. The Fed is expected to lower the cost of borrowing by as much as half a percentage point to 3.75% at the end of January, in an attempt to help spur anemic growth. UK December CPI unchangedMeantime in the UK inflation remained unchanged. December's Consumer Prices Index figure held at 2.1% for a third month in succession, reported the Office for National Statistics, ONS. The biggest inflationary pressure was continuing high food prices. The Retail Price Index inflation measurement, which includes mortgage interest payments, eased to 4% from 4.3% in November. The biggest easing on inflation last month came from utility bills, which rose by less than they had a year earlier. However ONS warned that this was likely to change in the coming months due to power station decisions two weeks ago to raise its energy bills, and the expectation that other providers will follow suit. There was also downward price pressure last month from reduced furniture prices, particularly for kitchen units and leather sofas. The fact that inflation remained on hold in December will increase expectations that the Bank of England has the breathing space to cut interest rates to 5.25% in February. This month the BoE left rates on hold at 5.5% following on December's cut from 5.75%.