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Bullard Kickstarts Reflation Unwind Theme


Fresh 2021 Lows

--Overall CPI Slows To +2.3% Y/Y, Core Unchanged At +2.2% Y/Y
--Initial Jobless Claims +7,000 To 214,000; Hurricane Impact Next Week
By Kevin Kastner and Shikha Dave
     WASHINGTON (MNI) - The CPI data suggest that consumer inflation 
rose only slightly in September, with the headline and core measures 
below expectations and the year/year rate for the overall measure 
falling from August, data released Thursday morning by the Bureau of 
Labor Statistics showed. 
     Overall CPI posted a 0.1% increase, below the 0.2% gain expected by 
both analysts and market participants, while the core CPI rose 0.1%, 
also below expectations. MNI analysis released Wednesday showed a 
tendency to overestimate core CPI, so this maintains that trend.
     Unrounded, the month/month rise for overall CPI was 0.059%, on the 
lower side of 0.1% increase, and the unrounded increase for core CPI was 
0.116%, on the upper side of a 0.1% increase. 
     Overall, the data point to steady progress in consumer inflation, 
as the year/year rate for the overall fell while the core measure was 
     The year/year rate for overall CPI slowed to 2.3% from 2.7%, while 
the year/year rate for core CPI was unchanged from 2.2% in August. This 
should calm some nerves that tariffs and Hurricane Florence lifted 
inflation in the month. 
     The large owners' equivalent rents category rose 0.2% and medical 
care prices rose 0.2%, while new vehicle prices were down 0.1% and used 
vehicles prices fell 3.0%. 
     Energy prices fell by 0.5% for September after a 1.9% rebound in 
August, with gasoline prices down 0.2%, fuel oil prices up 0.3%, 
electricity prices down 0.5%, and gas utilities prices down 1.7%. Energy 
prices were down 0.3% unadjusted. CPI excluding only energy was up 0.1%. 
     Food prices were flat in September, with food at home prices 
down 0.1% and food away from home prices up 0.2%. 
     In other data released on Thursday, the level of initial claims 
rose by 7,000 to 214,000 in the October 6 week after falling to 207,000 
in the previous week. 
     The four-week moving average rose by 2,500 to 209,500, and will 
likely rise further next week as the recent-low 202,000 level in the 
September 15 employment survey week rolls out of the equation. The 
impact of Hurricane Michael is likely to be much larger than that of 
Florence last month, so there is a large upside risk to claims for next 
     Continuing claims rose by 4,000 to 1.660 million in the September 
29 week, but the four-week moving average fell to 1.656 million, the 
lowest level since the August 18, 1973 week when it was 1.647m. 
     The recent claims levels are still evidence of a very tight labor 
market, however initial claims could be boosted in the coming weeks due 
to Hurricane Michael.  
     ** MNI Washington Bureau: 202-371-2121 ** 
[TOPICS: MAUDS$,MT$$$$,M$U$$$]