Hopes of a soft landing in the US economy were boosted yesterday by a report which revealed that US consumer prices held steady in November.

Inflation held steady last month after the cost of energy began tumbling in reaction to the decline in global crude oil prices this summer.

Analysts had expected an increase of 0.2 per cent in the Labor Department’s consumer price index. The index, which measures changes in prices for core goods such as clothing, had dropped 0.5 per cent in both September and October.

The US consumer price report will soothe policymakers at the Federal Reserve who warned earlier this week that inflation posed a serious risk to economic growth.

This Tuesday the Fed left rates unchanged but warned that it remained focused on inflationary pressures. The US central bank said these would ease over time partly because of lower energy prices.

Core prices excluding food and energy remained static in November, the first month without any increase for a year and a half.

Prices of US Treasuries climbed on expectations that the Fed will be able to keep interest rates unchanged at the beginning of the year.

Many economists and traders believe that the US will achieve a soft landing, though the Fed will be forced to lower rates in the spring to ease the impact of rising unemployment as the economy slows.

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