The Labor Department's latest reading Tuesday on the Consumer Price Index, the government's most closely watched inflation barometer, comes after consumer prices were flat in October. It marks the first decline in the CPI since April, when prices dropped by 0.3 percent.
Excluding energy and food prices, which can swing widely from month to month, "core" prices fell by 0.1 percent in November, the biggest drop since December 1982 and down from a 0.2 percent increase in October.
The declines in both overall consumer prices and in core inflation in November surprised economists. They were forecasting a tiny 0.1 percent advance in each measure.
In other economic news, the nation's red-hot housing market continued to sizzle in November with construction of new homes and apartments rising 4.5 percent to an annual rate of 2.07 million units, the fastest building pace in nearly two decades.
The number of single-family homes started by builders rose about 3.3 percent to a record 1.69 million seasonally adjusted annualized rate. Building permits fell about 5.4 percent to a seasonally adjusted rate of 1.87 million.
The figures blew past Wall Street estimates, reports CBS MarketWatch. Economists expected starts to fall to about 1.90 million in November. Over the past five months, housing starts have averaged a 1.94 million pace, up from 1.89 million a month ago. So far in 2003, 1.705 million homes have been started, up about 8 percent from a year earlier. In all of 2002, 1.704 million homes were started. It will be the best year for housing starts since the 1980s.
Despite the 2001 recession and a lackluster economic recovery up until recently, housing activity has soared over the past three years. Economists credit the strength in housing to the lowest mortgage rates in more than four decades.
In other economic news, the Commerce Department reported that the nation's broadest measure of foreign trade fell slightly to $135.04 billion this summer after setting an all-time high in the spring.
The drop in the current account trade deficit in the July-September quarter reflected a 3.1 percent improvement from a record quarterly deficit of $139.39 billion set in the April-June period.
Even with the small improvement in the third quarter, the country is well on its way to setting an all-time record deficit for the year of more than $500 billion in the current account.
Because inflation has been tame for some time, the Federal Reserve last week held a key short-term interest rate at a 45-year low of 1 percent and suggested it could stay there for a "considerable period."
Fed policy-makers at that time also said the dangerous prospect that inflation could move lower was less of a concern than it has been. That marked a change from recent months where Fed policy-makers identified the remote threat of deflation, a widespread and prolonged price decline, as a risk that they must be on guard against because of its potential to wreck the economy.
The worries about deflation should dim as the economy gains traction, analysts say.
The economy grew at a scorching 8.2 percent annual rate in the third quarter, the hottest pace in nearly two decades. Analysts believed the economy slowed to a 4 percent growth rate in the October-to-December quarter, which would still be considered a healthy pace.
For the first 11 months of this year, consumer prices have risen at a seasonally adjusted annual rate of 1.8 percent, slower than the 2.4 percent rise for all of 2002. Core prices, meanwhile, have advanced at a rate of 1.1 percent so far this year, compared with a 1.9 percent increase last year.
In November, falling prices for energy products, clothing and airline fares outweighed rising prices for food, medical care and college tuition.
Energy prices retreated by 3 percent in November. That was led by a 5 percent drop in gasoline prices. Natural gas prices fell 3.1 percent and electricity prices went down by 0.6 percent last month. However, fuel oil costs rose 1 percent.
Food prices rose by 0.4 percent last month. Higher prices for beef and veal, fruit, poultry and pork swamped lower prices for vegetables and dairy products.
Elsewhere in the report: clothing prices last month dropped by 0.5 percent, airline fares fell 2.6 percent, lodging prices declined 1.1 percent and new-car prices were flat.
Medical care costs rose 0.3 percent in November and college tuition and fees went up by 0.4 percent, continued sore spots for consumers.