November 17, 2006	Friday	Shawwal 24, 1427

WASHINGTON, Nov 16: US inflation cooled sharply in October, data released on Thursday showed, raising hopes that the Federal Reserve now has the evidence it needs to start cutting interest rates soon.

The Labour Department said its CPI fell 0.5 per cent in October on a sharp drop in energy costs. Excluding volatile food and energy costs, “core” prices increased 0.1pc for the month.

Both figures were below expectations on Wall Street, where analysts had been expecting a 0.3 per cent drop in the headline consumer price index and a 0.2 per cent rise in the core rate.

The headline CPI has risen 1.3 per cent in the past year, the slowest yearly increase since June 2002. The core-rate has risen 2.7 per cent in 12 months.

Energy prices fell 7pc in Oct after falling 7.2pc in the prior month. Food prices rose 0.3pc for the second consecutive month in Oct. The report should provide comfort to the Federal Reserve, which in August halted a campaign of rate hikes to check inflationary pressures, but said further hikes might be needed depending on economic data.—AFP