US consumer prices rose marginally in September from August, restrained by weak food and housing costs, according to government data today that pointed to scant inflation pressures as the economy makes a comeback from recession.
The Labor Department said its Consumer Price Index rose 0.2 per cent last month, matching analysts' expectations, after increasing 0.4 per cent in August.
Consumer prices are being closely watched for signs of inflation pressures in the wake of massive efforts by the government and the Federal Reserve to stimulate the economy out of a recession that started at the end of 2007.
Economic growth is believed to have resumed in the third quarter, but labor market slack will probably keep price pressures muted for a while and keep deflation on the radar.
The small monthly increase in September came as the food index dipped 0.1 per cent, falling for the sixth time in the last eight months.
Compared to the same period last year, consumer prices dropped 1.3 percent, with the food index declining from a year earlier for the first time in 40 years. Consumer prices have been falling on an annual basis since March.
Stripping out volatile energy and food prices, the closely watched core measure of consumer inflation inched up 0.2 per cent from August, a touch above market expectations for a 0.1 per cent gain.
Core prices were lifted by a bounce in new vehicle prices following the expiry of the popular "cash for clunkers" program that gave discounts to consumers to trade in their old gas-guzzling cars for new, fuel-efficient ones. New vehicles rose 0.4 per cent after plummeting 1.3 per cent in August.
The increase in core inflation came despite rentals and owners equivalent rent indexes posting their first declines since 1992.
Compared to August last year, the core inflation rate rose 1.5 per cent after increasing 1.4 per cent in August.
In separate data, the number of US workers filing new claims for jobless insurance unexpectedly fell last week to the lowest level since January, according to a government report on Thursday that hinted at stabilisation in the labour market.
Initial claims for state unemployment benefits fell 10,000 to a seasonally adjusted 514,000 in the week ended October 10th, the Labor Department said. New jobless claims have declined for five of the last six weeks.
Analysts polled by Reuters had forecast new claims rising to 525,000 last week from a previously reported 521,000.
The four-week moving average for new claims dipped 9,000 to 531,500 last week, declining for a sixth straight week. The four-week moving average is considered a better gauge of underlying trends as it irons out week-to-week volatility.
Even more encouraging, the number of people collecting long-term unemployment benefits dropped 75,000 to 5.99 million in the week ended October 3rd, the latest week for which the data is available. That was the first time that the so-called continuing claims had dropped below the 6 million mark since late March. This measure has trended lower for four consecutive weeks.
The fall, however, could be a sign that many jobless workers have exhausted their unemployment benefits.
The four-week moving average of continuing claims fell 68,250 to 6.08 million, the lowest level since mid-April. The insured unemployment rate, which measures the percentage of the insured labor force that is jobless, eased to 4.5 per cent in the week ended October 10th from 4.6 per cent the prior week.
Reuters