The negative sentiment caused partly by the terrorist attacks on the United States has seen consumer confidence in Hong Kong plunge to a new low, with prices falling for the 35th consecutive month. The broad composite consumer price index fell 1.2 per cent last month from a year earlier, according to the Census and Statistics Department. This compares with a 1.1 per cent year-on-year decrease in August. Last month's figure was in line with market expectations and economists believe deflation will last until next year. Citibank senior economist Joe Lo said the figure did not fully reflect the devastating attacks on the US, saying consumer prices would continue to fall. He attributed the decline to retailers offering discounts to boost sales and the softening residential rental market. Multinational corporations were forced to cut back housing allowances for expatriate staff amid the slackening economic conditions, he said. SG Securities regional economist Daryl Goh said the deepening deflation was partly due to currency depreciation around the region of between 3 per cent and 5 per cent. Consumers would continue tightening belts as the unemployment rate has yet to reach its peak, he said. Mr Goh believed unemployment could climb to 5.5 per cent at the end of the year. The Government last week announced the jobless rate was 5.3 per cent for the third quarter - its highest level for 17 months. SG Securities has revised its economic growth forecast for the third quarter to negative 3.2 per cent after taking the September 11 attacks into account. A government spokesman said overall consumer prices remained soft last month, as import prices continued to fall amid easing world commodity prices. Also relevant were a moderation in consumer spending and keen competition, which led retailers to continue to keep their prices down. Durable goods prices registered a fall of 8.1 per cent, the largest year-on-year decline, followed by clothing and footwear, which dropped 5.1 per cent. Food fell by 1.1 per cent last month from last year.