WASHINGTON - US CONSUMER prices in November plunged by the largest amount on records going back 61 years as energy costs posted nearly double the decline of the previous month.

The Labour Department reported on Tuesday that consumer prices fell 1.7 per cent in November, surpassing the previous record decline of 1 per cent set in October. The drop was the largest one-month decline dating to February 1947.

The huge decreases reflect the severe recession gripping the country and raise the pressure for the Federal Reserve to act decisively to guard against a debilitating bout of deflation.

In other economic news, the Commerce Department reported that construction of new homes fell in November by 18.9 per cent, the biggest drop in a quarter-century. The steep decline pushed construction down to a seasonally adjusted annual rate of 625,000 homes, the slowest pace on records that go back to 1959.

The Fed wraps up a two-day meeting on Tuesday. Economists expect the central bank to cut the federal funds rate, already at a low of 1 per cent, by another half-point in an effort to keep the recession from worsening.

Only a few months ago, some anticipated that the Fed would start raising interest rates to battle a prolonged surge in energy costs.

But since September, the Fed's focus has switched to trying to prevent the worst financial crisis since the Great Depression of the 1930s from pushing the country into a deeper recession.

The turnaround in inflation reflects a huge drop in energy costs.

Energy prices fell by a record 17 per cent in November, nearly double the 8.6 per cent decline in October. Both declines represented record drops.

Food costs posted a modest 0.2 per cent rise in November, the smallest increase in eight months.

Core inflation, excluding food and energy, showed no increase at all in November following a 0.1 per cent drop in October. -- AP