Thursday, 19 November 2009

US inflation accelerates, housing starts fall

As the economic recovery gets underway, inflation is also making a comeback.

MarketWatch reports that US consumer prices accelerated in October.

The consumer price index increased a seasonally adjusted 0.3% in October as energy prices increased for the fifth time in six months to offset another rare decline in rents, the Labor Department said.

The core CPI rate, which excludes food and energy prices in order to get a better look at underlying inflation in the economy, rose 0.2% last month, led by higher prices for cars and trucks, due in part to the unwinding of the government's "cash-for-clunkers" incentives program...

The consumer price index has fallen 0.2% in the past year. The core CPI is up 1.7% in the past year. In September, the CPI and the core CPI were up 0.2%.

However, for the near term, sustainability of the economic recovery is likely to remain a greater concern than inflation. MarketWatch reports that US housing starts fell back to the lowest level in six months in October.

In a blow to the optimism that had surrounded the U.S. housing sector in recent months, housing starts fell a sharp 10.6% in October, the Commerce Department reported Wednesday.

New construction on housing units dropped to a seasonally adjusted annual rate of 529,000, the lowest level since April. The 10.6% drop was the biggest percentage decline for starts since January...

Meanwhile, building permits fell 4% to a seasonally adjusted annual rate of 552,000 in October.

Still, the return of rising inflation is a global phenomenon. On Wednesday, Canada reported its first annual increase in consumer prices in five months with the CPI rising 0.1 percent in October from a year ago.

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