- Steve Murphy, US economist at Capital Economist
The US annual inflation dropped the most in eight months in September, weighed down by cheap fuel, according to data released by the Bureau for Labor Statistics. The consumer price index declined 0.2% last month after sliding 0.1% in August. In the 12 months through September, consumer inflation was unchanged for the first time in four months after climbing 0.2% in August. However, the core annual CPI edged up 1.9%, the largest rise since July 2014, after increasing 1.8% in August. Low inflation, which has persistently run below the Fed's 2% target, is a major hurdle to an interest rate hike this year.
At the same time, the number of Americans applying for new applications for jobless benefits fell back to the lowest level in 42 years last week, suggesting the labour market remained strong despite a steep slowdown in job growth in the past two months. Initial claims for state unemployment benefits declined 7,000 to a seasonally adjusted 255,000 for the week ended October 10, the Labor Department reported. Claims were last at this level in July, which was the lowest since November 1973. It was the 32nd consecutive week that claims remained below the 300,000 threshold, which is normally associated with an improving labour market.
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