Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (30482)	10/18/1999 6:30:00 PM
From: Les H	Respond to of 99985

US DATA PREVIEW: SEPT CPI HIGHER BUT NO PPI-LIKE SURPRISE SEEN By Marco Babic WASHINGTON (MktNews) - Consumer prices in the United States are seen posting a gain marginally above the 0.3% gain seen in recent months, driven by higher tobacco, energy and food prices. Although many analysts view the increase as a one-off event due to higher prices in these sectors, some see that the benefit of cheap energy and fuel costs, which have faded away, presenting a risk down the road. A Market News International survey of 20 economists forecasts was for a 0.4% increase for CPI in September while the core rate is seen up a slightly more moderate 0.3%. In August, CPI was up 0.3% on the month while the core rose 0.1%. The 18 cents increase in tobacco prices which took effect at the beginning of September should not affect the CPI to the extent that it did the PPI given the smaller weighting of tobacco in the CPI. But even with expected increases in some areas of the CPI, analysts generally see that inflation pressures are minimal at the present time. Analysts also warned against drawing comparisons between last week's stratospheric gain in PPI and the upcoming CPI. Last week, the Labor Department reported September producer prices up 1.1% on the month with the core rate posting a 0.8% rise. Jay Feldman and Mike Cloherty noted that "the month-to-month correlation between PPI and CPI is poor for most categories so last week's upside surprise in producer prices does not change our forecast for Tuesday. Moreover, the surge in tobacco prices and an expected surge in food prices is likely to be temporary. Carol Stone, economist at Nomura Securities International said the CPI rise will be "more moderate" than the PPI rise "though still a relatively large one." Even so, "this need not be especially alarming, however, due to the one-time nature of the tobacco hike and likely temporary food price gains which are due in large part to shortages from bad weather in growing regions." "Despite increased cost pressure, overall consumer price inflation remains restrained, but last week's PPI report certainly got the Fed's attention," according to Bank of America economist Mickey Levy. Levy expects that "surging prices for oil-based energy products, along with other settlement-related price increases for tobacco goods likely led to the largest monthly jump in consumer prices since April." The expected increase in September CPI is expected to be tempered in coming months, though not to the point that inflation will be as tame as it has been in the past. CIBC World Markets is looking for a 0.5% gain in total and 0.3% gain in core CPI though expect the September "spike in CPI will in part be reversed in October/November, as the give back in crude prices works its way into consumer energy costs. But the bottom line is that the headline inflation has lost the benefits of cheap energy and import costs, a factor that should put upward pressure on wages, and ultimately, core CPI." The Department of Labor is scheduled to release September Consumer Price Index data Tuesday, October 19.