The U.S Bureau of Labor Statistics released the September CPI figures which were largely in line with expectations. The headline inflation rate came in at -0.2% for the month, down from August’s -0.1%, as energy prices continue to offset price rises elsewhere in the economy. The year-to-date figure was -0.1%, down from August’s comparable figure of 0.2%. Core inflation, which strips out the more volatile food and energy components, rose to 1.9% for the last 12 months, up from August’s figure of 1.8% and higher than market expectations.
ANZ said the higher core inflation result suggests reduced spare capacity in the economy is offsetting the higher US exchange rate and lower energy prices. U.S core inflation had been steady at 1.8% for the six months previous to this result and the September core figure is just short of the Fed’s target of 2.0%. US 10y bond rates finished the day higher, up 5bps to 2.02%.