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Used vehicles lift U.S. consumer prices, but inflation slowing

Used vehicles lift U.S. consumer prices, but inflation slowing

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. consumer prices increased for a fourth straight month in September, with the cost of cars and trucks rising by the most since 1969, though inflation is slowing amid labor market slack as the economy gradually recovers from the COVID-19 recession.

While the benign report from the Labor Department on Tuesday will have no direct impact on monetary policy, it should allow the Federal Reserve to keep interest rates near zero for a while and continue with massive cash infusions as it nurses the economy back to health.

The U.S. central bank is now more concerned about the labor market and has embraced flexible average inflation targeting, which in theory could see policymakers tolerate price increases above its 2% target for a period of perhaps several years to offset years in which inflation was lodged below its goal.

At least 25.5 million people are on unemployment benefits.

The consumer price index rose 0.2% last month after gaining 0.4% in August. The CPI advanced 0.6% in both June and July after falling in the prior three months as business closures to slow the spread of the coronavirus weighed on demand.

A 6.7% jump in the prices of used cars and trucks accounted for most of the increase in the CPI last month. That was the biggest gain since February 1969 and followed a 5.4% advance in August. There were also increases in the costs of new vehicles and recreation. But prices for motor vehicle insurance, airline fares and apparel fell.

In the 12 months through September, the CPI increased 1.4% after rising 1.3% in August. Economists polled by Reuters had forecast the CPI climbing 0.2% in September and rising 1.4% year-on-year.

Excluding the volatile food and energy components, the CPI rose 0.2% last month after

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Used Vehicles Lift U.S. Consumer Prices, but Inflation Slowing | Investing News

Used Vehicles Lift U.S. Consumer Prices, but Inflation Slowing | Investing News

WASHINGTON (Reuters) – U.S. consumer prices increased for a fourth straight month in September, with the cost of cars and trucks rising by the most since 1969, though inflation is slowing amid labor market slack as the economy gradually recovers from the COVID-19 recession.

While the benign report from the Labor Department on Tuesday will have no direct impact on monetary policy, it should allow the Federal Reserve to keep interest rates near zero for a while and continue with massive cash infusions as it nurses the economy back to health.

The U.S. central bank is now more concerned about the labor market and has embraced flexible average inflation targeting, which in theory could see policymakers tolerate price increases above its 2% target for a period of perhaps several years to offset years in which inflation was lodged below its goal.

At least 25.5 million people are on unemployment benefits.

The consumer price index rose 0.2% last month after gaining 0.4% in August. The CPI advanced 0.6% in both June and July after falling in the prior three months as business closures to slow the spread of the coronavirus weighed on demand.

A 6.7% jump in the prices of used cars and trucks accounted for most of the increase in the CPI last month. That was the biggest gain since February 1969 and followed a 5.4% advance in August. There were also increases in the costs of new vehicles and recreation. But prices for motor vehicle insurance, airline fares and apparel fell.

In the 12 months through September, the CPI increased 1.4% after rising 1.3% in August. Economists polled by Reuters had forecast the CPI climbing 0.2% in September and rising 1.4% year-on-year.

Excluding the volatile food and energy components, the CPI rose 0.2% last month after increasing 0.4% in

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Canada exports and imports fall in August, flag slowing recovery

Canada exports and imports fall in August, flag slowing recovery

By Julie Gordon

OTTAWA (Reuters) – Canada’s exports and imports both fell in August, hinting that the momentum of the recovery from the COVID-19 crisis could have slowed more than anticipated, data from Statistics Canada showed on Tuesday.

Imports fell 1.2%, while exports were down 1.0%. Canada’s trade deficit, meanwhile, narrowed slightly to C$2.45 billion ($1.85 billion), missing analyst expectations of C$2.0 billion.

Statscan revised July’s trade deficit to C$2.53 billion from an initial C$2.45 billion.

“The slowdown in trade showed up earlier than we had anticipated, and the drop in export volumes suggests that the recovery’s momentum could have slowed more than anticipated in August,” said Royce Mendes, senior economist at CIBC Economics, in a note.

Lower imports of aircraft and other transportation equipment and parts drove the import decline, while exports fell after three months of strong gains on lower exports of passenger cars and light trucks, Statscan said.

Imports from Canada’s largest trading partner, the United States, fell 1.6%, while exports to that country were up 1.0% on higher lumber exports. Exports to all countries remained 7% below pre-pandemic levels, while imports remained down 5.1%, Statscan said.

“Overall, the fact that we haven’t fully recovered in the merchandise side is a disappointment,” said Ross Prusakowski, principal economist at Export Development Canada.

Prusakowski noted that some of the export weakness was temporary, pointing to a strike at the Port of Montreal in August that had an impact on shipments, particularly to Europe.

“That’s one area where we think there might be some strength coming back,” Prusakowski said.

Analysts also noted that a July boost caused by shorter seasonal shutdowns at most auto assembly plants did not continue into August, returning trade in that segment to more typical levels.

Still, export levels of passenger cars and light trucks were

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European stocks climb despite slowing economic recovery

European stocks climb despite slowing economic recovery

European stocks continued their ascent on Friday morning despite sustained uncertainty about the continent’s economic recovery and rising coronavirus infections.

The region-wide Stoxx 600 was up 0.2 per cent by mid-morning while London’s FTSE 100 advanced 0.6 per cent and France’s Cac 40 edged up 0.3 per cent. European equities also advanced on Thursday, with major bourses trading around their highest level in almost three weeks.

The moves higher came despite indications that the continent’s economic recovery had slowed to a crawl. Data released on Friday showed that UK economic output grew slower than expected in August, rising 2.1 per cent month-on-month compared with expectations by analysts polled by Reuters for a 4.6 per cent increase. In France, industrial production rose 1.3 per cent in August, according to Insee, below expectations for a 1.7 per cent increase.

UK gross domestic product was nearly 10 per cent below its pre-Covid-19 February level despite the loosening of coronavirus curbs, “underlining that the recovery has not been V-shaped”, said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

James Smith, developed markets economist at ING, said the UK’s recovery “looks set to stall in the fourth quarter as fresh virus measures loom” while infections rise.

In the Asia-Pacific region, China’s onshore renminbi, which has not moved for six trading days thanks to the lengthy National Day holiday, rose as much as 1.2 per cent on Friday to Rmb6.7091 per dollar. That marked the currency’s biggest intraday increase against the greenback since February 2016.

The less-regulated offshore renminbi, which traded throughout most of the recent holiday, climbed 0.6 per cent to Rmb6.6976.

Mounting expectations of a win for Democratic candidate Joe Biden in November’s US presidential election helped boost sentiment towards China’s currency.

China’s onshore stock market was also bolstered by signs that the

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