WASHINGTON, Sept 12: The US trade deficit surged to a record $68 billion in July as rising oil prices created a mammoth fuel bill for the world's largest economy, the government said on Tuesday.

Economists warned that the import boom could worsen the flagging economy's performance in the months ahead.

The new high reported by the Commerce Department compared to June's deficit of 64.8 billion, and was much bigger than Wall Street's consensus forecast of $65.5 billion.

The deficit is on course to smash last year's annual record of $717bn. In the first seven months of 2006, the trade gap has reached $453 billion compared to 398.2bn over the same period of 2005.

The July deficit easily topped the previous record set in October last year of $66.6 billion.

The world's biggest economy is already flagging, with GDP growth cooling to an annualised pace of 2.9 per cent in the three months to June, down from 5.6 per cent in the first quarter.—AFP