Rising costs, triggered by the weak US dollar and spurting oil prices, slowed the US economy to its most languid pace in two years, as the nation's businesses and consumers alike tightened their purse strings.

Data released last week by the Commerce Department showed US growth dropping to an annualised rate of 3.1% in the first three months of the year. This compares with 3.8% recorded in Q4 last year and an earlier forecast of 3.6% for Q1 2005.

Growth in consumer spending, accounting for two thirds of America's GDP, slowed to an annualised rate of 3.5% in the first quarter, down from over 5% last year.

Also triggering unease was the National Institute of Economic and Social Research prediction that US inflation could rise to 3.8% next year as America's massive trade deficit further undermines the value of the US dollar.

Data sourced from The Times Online (UK); additional content by WARC staff