Consumer prices plunge 0.6%
November drop spurred by record fall in energy costs
WASHINGTON -- A record drop in energy costs pushed consumer prices down at the fastest pace in 56 years in November. But it won't last because gasoline prices are rising again and heating costs are expected to soar this winter.
The Labor Department report yesterday showed the consumer price index fell by 0.6 percent last month, the biggest decline since a 0.9 percent fall in July 1949. It reflected a record 16 percent drop in gasoline prices.
Pump prices had fallen steadily after hitting a record of $3-plus per gallon in early September. But they edged up slightly in the Energy Department's latest weekly survey; private economists said more increases are expected.
In addition, analysts are forecasting that home heating bills will be significantly higher than last winter's, reflecting higher costs for both natural gas and home heating oil.
For November, the core rate of inflation, which excludes energy and food, rose by 0.2 percent. That matched October's increase and put both months higher than the 0.1 percent gains recorded for the previous five months.
Analysts said this rise reflected mounting inflationary pressures that probably will worsen as the shock of energy costs spills over into other parts of the economy. Costs rose in a variety of areas in November, from housing to hotel rooms and education to medical care. Analysts noted that even with the huge drop in gasoline prices, they still are 16 percent higher than they were in November 2004.
''Energy costs are off but still high and everywhere else prices are rising," said Joel Naroff, chief economist at Naroff Economic Advisors. ''Inflation is not out of control, but it is not tame either."
The Federal Reserve on Tuesday raised interest rates for a 13th time while also indicating that the increases soon may end.
For November, overall energy prices dropped by a record 8 percent. Food prices rose by 0.3 percent. Excluding food and energy, prices this year are up 2.1 percent, essentially unchanged from last year's 2.2 percent increase.
