US industrial output down sharply

Energy output was hit by hurricanes Gustav and Ike

US industrial production saw its sharpest fall in 34 years in September, with a slowdown in output exacerbated by hurricanes Gustav and Ike.

The output of mines, utilities and factories fell 2.8% last month, after dipping 1% in August, according to the Federal Reserve.

There are concerns that the US may already have entered a recession.

Meanwhile separate figures showed that consumer prices remained flat in September, a sign of easing inflation.

While the industrial figures were worse than expected, analysts argue that as inflation eases, there is more scope for the US Federal Reserve to lower interest rates, which in turn could boost economic growth.

Lower energy prices

US consumer price inflation remained steady in September, as lower energy and clothes prices helped counter higher food costs, figures show.

The unexpectedly flat Labor Department data came after the Consumer Price Index fell 0.1% in August.

Analysts had expected September to show an increase of 0.1%, but instead it remained unchanged.

A main cause for the flat data was lower oil prices, which have fallen from record highs reached in July.

Overall, energy costs were 1.9% lower for the month.

Ian Shepherdson, chief US economist at High Frequency Economics, said energy prices were diminishing and were likely to fall further.

While petrol prices shed 0.6% in September, he said it was "already clear October gas prices will plunge; our current forecast is for a massive 18% drop".

The core index, which strips out food and energy, was also less than expected, rising 0.1% after increasing 0.2% in August.

On a yearly basis, overall consumer price inflation rose 4.9%, while core prices are 2.5% higher over the same period.