Washington ? Consumer prices tumbled yet again in December, and inflation last year logged its smallest advance since the early 1950s, fanning new fears that the country may face a dangerous bout of deflation.

Worries about out-of-control price increases, which had gripped the Federal Reserve and the country just seven months ago, are now a distant memory. Some wonder in hindsight: Should the Fed have kept cutting interest rates all last year to help the recession-shocked country, rather than stopping in the summer and early fall out of concerns that lower rates would spur inflation?

The Labor Department’s latest inflation report, released Friday, showed consumer prices dropped 0.7 percent in December, marking the third straight month prices fell.

For all of 2008, prices inched up 0.1 percent, the smallest increase since 1954. Although prices spiked during some summer months — as oil hit record highs and food prices marched upward– the inflation threat of 2008 ended up fizzling.

Average weekly earnings, after adjusting for inflation, rose 2.9 percent last year, a big improvement from 2007 when earnings fell 1 percent, the government report showed.