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High oil prices spur US inflation US prices jump most in two years
(10 minutes later)
US inflation rose in November by the biggest amount in two years, above forecasts and spurred by higher energy prices, official figures show. US inflation rose at its fastest rate in two years during November, spurred by higher energy prices, according to figures from the Labor Department.
Consumer prices rose by 0.8% in November - the biggest rise since September 2005, following energy shortages after hurricane Katrina. Consumer prices rose by 0.8% in November, above forecasts and marking the biggest rise since September 2005.
Core inflation, which strips out volatile energy and food prices, rose 0.3% compared to the month before.Core inflation, which strips out volatile energy and food prices, rose 0.3% compared to the month before.
Energy prices worldwide have reached record levels recently. Some analysts say the figures reduce the chance that the US Federal Reserve will cut interest rates again soon.
Earlier, eurozone inflation saw its biggest rise in more than six years for November, also prompted by higher oil prices, which have reached record levels recently.
'Dilemma''Dilemma'
November also saw increases in the cost of clothing, airline tickets and medication. The last time US inflation rose by such a large amount on a monthly basis came after an energy shortage in the wake of hurricane Katrina in September 2005.
As well as energy, the cost of clothing, airline tickets and medication also rose in November in the US.
Consumer prices increased 4.3% on a yearly basis - the most dramatic rise since June 2006.Consumer prices increased 4.3% on a yearly basis - the most dramatic rise since June 2006.
The rise in inflation comes at a time when economic growth in the world's largest economy is slowing due to the housing slowdown and credit crisis.The rise in inflation comes at a time when economic growth in the world's largest economy is slowing due to the housing slowdown and credit crisis.
There are fears that as energy costs increase, consumers will have less money to spend, which could further hamper economic growth.There are fears that as energy costs increase, consumers will have less money to spend, which could further hamper economic growth.
While the US Federal Reserve (Fed) has cut interest rates three times in recent months to boost the economy, analysts suggest that these figures will make another interest rate cut less likely. While the US central bank has cut interest rates three times in recent months to boost the economy, analysts suggest that these figures will make another interest rate cut less likely.
Kim Rupert at Action Economics said: "The data highlights the huge dilemma the Fed is under between trying to quell the financial dislocations in the market, easing policy, all the while inflation rates are starting to climb higher."Kim Rupert at Action Economics said: "The data highlights the huge dilemma the Fed is under between trying to quell the financial dislocations in the market, easing policy, all the while inflation rates are starting to climb higher."
"It's going to be a difficult road for the Fed.""It's going to be a difficult road for the Fed."
For the year to date, inflation is at 4.2% on an annual rate - far above the 2.6% seen in 2006.