US economy on the mend but deflation still a risk
There was further proof yesterday that the US economy is starting to recover from recession as data showed that US consumer prices rose modestly in September.
The US Labour Department said the Consumer Price Index (CPI) rose 0.2 per cent in September on the previous month, taking the annual inflation rate to -1.3 per cent from -1.5 per cent in August.
Paul Ashworth, senior US economist at Capital Economics, said that there were worrying deflationary forces in the housing market.
“The upshot is that we believe deflation is still the biggest threat, despite signs that the recovery in the real economy continues to gain momentum,” he added.
The department also said initial claims for unemployment aid fell to 514,000 last week, indicating an easing in job shedding, while the Empire State manufacturing index surged to +34.6 in October, from +18.9.