Washington, Jan 20 (IANS/EFE): US consumer prices rose 3 percent in 2011, the largest annual increase in four years, the Labor Department said Thursday.

So-called core inflation, which excludes volatile food and energy prices, was 2.2 percent, also the highest since 2007, but only slightly above the range deemed acceptable by the Federal Reserve.

The report showed that the inflation rate in December was down sharply from its June high of 3.9 percent, thanks mainly to an easing of energy prices during the second half of the year.

The data appeared to support the Fed's decision to keep interest rates low.

Even so, last year's increases in food and energy prices hurt consumers in an economy where median hourly pay declined 0.9 percent over the last 12 months.

New applications for unemployment benefits fell 50,000 last week to 352,000, the fewest since April 2008, the Labor Department said Thursday in a separate report.

The rolling four-week average of jobless claims, viewed as a more reliable guide to underlying trends, dipped 3,500 to 379,000.

The number of people receiving state unemployment benefits declined by 215,000 during the week that ended Jan 7 to 3.43 million.

State benefits generally run out after 26 weeks, but the worst economic slump since the Great Depression prompted lawmakers to approve federal emergency programs that provide jobless benefits for up to 99 weeks.

For the week ending Dec 31, the ranks of those getting state or federal unemployment benefits climbed 493,566 to 7.83 million.

The US economy gained 200,000 net new jobs in December, bringing the unemployment rate down a tenth of a percentage point to 8.5 percent, its lowest level since February 2009, the Labor Department said last week.