Brisk inflation remains a global threat

<p>Kia ora,</p><p>Welcome to Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the international edition from Interest.co.nz.</p><p>And today we lead with news inflation's force is on full display again, and long bond yields are back rising.</p><p>But first in the US, <a href="https://www.bls.gov/news.release/cpi.nr0.htm" target="_blank"><strong>consumer inflation</strong></a> was steady at 3.7% in September, the same as August, against market expectations of a slight decrease to 3.6%. A smaller decline in energy prices offset slowing inflationary pressures in other categories. Energy costs fell by -0.5%, following a -3.6% decrease in August, primarily because petrol prices rose offsetting other energy like natural gas and electricity price retreats.</p><p>Core inflation, that is without food or energy, fell to a still-high 4.1%, but that is its lowest in two years.</p><p>Meanwhile, the actual number of Americans filing for <a href="https://www.dol.gov/sites/dolgov/files/OPA/newsreleases/ui-claims/20232207.pdf" target="_blank"><strong>jobless benefits</strong></a> last week was unchanged from the prior week at 197,000 which was below estimates of 210,000 and remaining close to the seven-month low. There are now 1.55 mln people on these benefits, also lower. No labour market stress signs here.</p><p>Between the two metrics - brisk inflation holding and extending labour market strength - the Fed seems still a long way off being able to declare victory. The higher for longer theme we saw in yesterday's Fed minutes for its September meeting is justified by this latest data.</p><p>In the background, US Social Security payments will rise by +3.2% from January 1, 2024, it was <a href="https://www.ssa.gov/news/press/releases/2023/#10-2023-2" target="_blank"><strong>announced</strong></a> overnight. That will affect more than 70 mln recipients. But that is a lot less than the +8.7% rise for 2023. The 2024 increase will amount to abou