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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: porcupine --''''> who wrote (1683)	6/16/1999 11:03:00 AM
From: porcupine --''''>	Read Replies (1) \| Respond to of 1722

Consumer Prices Unchanged in May By The Associated Press -- June 16, 1999 WASHINGTON (AP) -- Consumer prices held steady in May following an April jump that was the largest in nearly nine years. Falling energy prices balanced rising food costs to help keep the Consumer Price Index flat last month, the Commerce Department said today. Core prices -- which exclude the volatile energy and food categories and are the most closely watched by economists -- rose a modest 0.1 percent as clothing and auto prices declined and medical and housing costs edged up. So far this year, the annual rate of inflation felt by consumers is 2.6 percent, compared to a 1.6 percent rise for all of 1998, the smallest in a dozen years. The May calm came after consumer prices rose an unexpectedly sharp 0.7 percent in April. A record increase in energy prices led that upward swing. In response, Federal Reserve officials, after a May 18 meeting, issued a warning that if inflation persists, they are more likely than not to raise interest rates later this year. That would make credit more expensive, likely slowing the economy. The Fed's next meeting is scheduled for June 29-30. Many economists, however, believe that central bank officials will wait at least until later in the summer before deciding whether to take any action on interest rates. In other reports today that the Fed may be watching to gauge the health of the economy: --Industrial production, which is making a fragile recovery from a slump in global demand caused by economic troubles abroad, edged up 0.2 percent in May, the smallest increase since February. The Federal Reserve said the modest production gain at the nation's factories, mines and utilities reflects a sharp increase in output of automotive products, which partially offset a large drop in the production of appliances. --Construction of new housing rebounded in May, increasing 6.3 percent to a seasonally adjusted annual rate of 1.676 million units after falling 9.7 percent in April, the Commerce Department said. Although the April spike in prices was surprisingly large, it was not totally unexpected and many analysts have predicted more moderate inflation for the rest of this year. Prices are expected to rise as other countries begin to recover from nearly two years of global financial turmoil and world demand picks up. Energy prices dropped 1.3 percent in May after a record 6.1 percent jump in April. Gasoline prices fell back 2.7 percent after a 15 percent rise. The April energy price spike, caused mainly by a spring agreement by the Organization of Petroleum Exporting Countries to limit production, had been expected to be temporary. Electricity and natural gas prices also declined in May, although fuel-oil prices continued to edge up slightly. Food prices, meanwhile, rose 0.4 percent in May, building on a 0.1 percent April rise. The cost of fresh vegetables was up 4.9 percent and fresh fruit prices rose 1.5 percent. Meat prices rose 0.2 percent overall, although poultry prices were down 1.2 percent. Clothing prices fell 0.2 percent in May, with the cost of footwear down 1.3 percent. Computer prices also dropped, by 1.9 percent. The apparel and computer industries continue to be affected by stiff competition from low-priced imports. The price of new cars and trucks also fell in May, by 0.1 percent, and public transportation costs dropped 1.5 percent. Airline fares fell 2.5 percent. The cost of tobacco and smoking products declined 1.4 percent. Among prices that increased in May: The cost of housing was up 0.1 percent with rents rising 0.2 percent. And the price of medical care rose 0.2 percent with prescription drug prices climbing 0.4 percent. Drug prices are rising at a 6.1 percent annual rate so far this year.