US consumer prices tick up in September - Jobless claims fall more than expected

US consumer prices tick up in September - Jobless claims fall more than expected
By Alan Rappeport in New York
Copyright The Financial Times Limited 2009
Published: October 15 2009 14:08 | Last updated: October 15 2009 14:08
http://www.ft.com/cms/s/0/be8cd8c6-b985-11de-abac-00144feab49a.html


The cost of living in the US rose modestly last month in spite of a fall in food prices, signalling that inflation remains in check.

In September the consumer price index ticked up by 0.2 per cent, leaving it 1.3 per cent lower than the same month a year ago, the labour department said on Thursday. The result showed prices rising in line with economists’ expectations.

Core price inflation, which excludes food and energy and is the measure by which economists judge the risk of inflation, also rose by 0.2 per cent.

“Recovery all go, inflation still slow, is the slogan,” said Alan Ruskin, a strategist at RBS Greenwich Capital, arguing that the data do not shift the view that inflation risks remain on the downside in the near future.

Much of the monthly gain was due to price increases for used cars and trucks, apparel and medical care. Energy prices, which have fallen by 21.6 per cent in the last year, climbed by 0.6 per cent from August to September. The price of food slipped by 0.1 per cent in the month.

Economists have been anxious to see if US prices will begin to rise as the economy begins to grow after the longest stretch of contraction since the Great Depression. The latest meeting minutes from the Federal Reserve indicated that inflation is unlikely to be a problem in the near term.

“With substantial resource slack likely to continue to dampen cost pressures and with longer-term inflation expectations stable, the Committee expects that inflation will remain subdued for some time,” the Fed said.

Separately on Thursday, official figures showed that the number of US workers claiming unemployment benefits eased last week, falling to the lowest level since January.

New jobless claims fell by 10,000 to 514,000. That was lower than Wall Street analysts had predicted and the number of workers continuing to claim unemployment benefits also declined, falling by 75,000 to 6m.

“Looking ahead, the pace of declines in claims and the message this sends regarding payroll employment will be critical,” said Joshua Shapiro, chief US economist at MFR. “We expect the improvement to remain a very slow one, and therefore for the household sector to be contending with a weak labour market for quite some time.”

Although Florida and California saw fewer job cuts, Pennsylvania, Washington and Wisconsin felt the brunt of more construction layoffs.