The annual rate of US consumer inflation has fallen again in September after a string of increases in the first half of 2018. Consumer price index (CPI) figures released by the Bureau of Labor Statistics indicated seasonally-adjusted consumer prices increased by +0.1%, less than the +0.2% expected by economists and less than August’s +0.2%. On a 12-month basis, the consumer inflation rate slipped from August’s 2.7% back to 2.3%.
“Core” inflation, a measure of inflation which strips out the volatile food and energy components of the index, increased on a seasonally-adjusted basis by +0.1% for the month, also less than the 0.2% increase expected. The annual rate remained unchanged at 2.2%.
Reaction to the inflation figures was caught up in a flight to safety as turmoil reigned in global equity markets. By the end of the day, 2-year Treasury yields had increased by 2bps to 2.76% but 10-year yields had lost 2bps to 3.15% and 30-year yields had fallen by 3bps to 3.32%. The USD weakened against other major currencies, especially the euro.