A slew of U.S. American data released this morning confirms a recovery in the economy. But inflation data is showing that consumers seem to have very little pricing power. This affirms the U.S. Federal Reserve’s instinct to keep interest rates low.

The U.S. Labor Department is reporting that consumer prices advanced in September, mostly reflecting higher gasoline prices .

The consumer-price index rose 0.3% last month, the same increase as in August. The core index, which excludes food and energy prices, edged up 0.1%. In annual terms, the core increase was 1.2%, a 37-year low.

In a separate release, the Labor Department is reporting that the number of workers filing first-time applications for unemployment benefits dropped to an eight-month low last week. Initial jobless claims fell by 4,000 to 384,000 last week. Economists had expected an increase of 8,000 claims.

A third report showed U.S. businesses let inventories shrink in August as many remain cautious about stockpiling goods until demand firms up. Automobile stocks posted the largest decline in nearly two years.

Inventories decreased 0.4%, the largest drop since December 2001, to a seasonally adjusted level of US$1.17 trillion, according to the Commerce Department. That followed a revised 0.2% decline in July.

So far this morning Wall Street futures are down. The next economic report that could affect the markets is the Philadelphia Federal Reserve report on manufacturing due at noon.

Canadian markets are expected to take the lead of American equity markets. Meanwhile, investors are expecting Inco Ltd., which makes up about 0.8% of the main Toronto index, to incur a sharp sell-off. The metals producer warned late yesterday that post-strike problems will hurt its third-quarter results.

In Europe at midday, London’s FTSE 100 has shed 0.3%. Frankfurt’s DAX added 0.1%. The Paris CAC-40 is up 0.1%.

Yesterday, the Toronto Stock Exchange S&P/TSX composite index rose 33.79 points, or 0.44%, to 7,783.21.

On Wall Street, the tech-heavy Nasdaq composite index ended down 4.09 points, at 1,939.10, based on the latest available figures.

The blue-chip Dow Jones industrial average eased 9.93 points to 9,803.05. The broad S&P 500 was down 2.72 points at 1,046.76.

Canadian banks began raising their medium and longer-term mortgage rates Wednesday, as yields rose in the bond market.

The 10-year Government of Canada bond yield hit 4.97% Wednesday, up almost a third of a percentage point from the lows reached around the start of October.