MercoPress. South Atlantic News Agency

Jump in US claims for jobless benefits; May consumer prices drop 0.2%

Gasoline prices at the pump dropped 5.2%

The number of US workers filing new claims for jobless benefits jumped last week after three straight declines, the Labour Department said on Thursday. First-time claims rose by 12,000 to a seasonally adjusted 472,000, the highest level in a month.

The release overshadowed a report that showed consumer prices remain essentially flat.

The rise in jobless benefits claims and data released Wednesday showing new home construction plunged in May after government incentives expired have highlighted fears the economic rebound will not continue.

A separate Labour Department report said consumer prices fell for the second straight month in May. The 0.2 per cent decline in the consumer price index was pulled down by falling energy prices, most notably a 5.2% drop in gasoline prices.

May's drop in prices was the biggest monthly decline since December 2008. In April prices had fallen 0.1%.

But economists said it was unlikely that the trend would result in a dangerous spiral of deflation, as core prices - which strip out energy costs - saw a small rise.

Core prices rose 0.1% in May, while energy prices dropped 2.9% - the biggest monthly drop in a year. Gasoline prices were down 5.2%.

The annual rate of inflation now stands at 2%, meeting the US Federal Reserve's target.