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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: russwinter who wrote (13617)	10/18/2004 9:24:58 PM
From: mishedlo	Respond to of 116555

U.S. CPI expected to remain tame Monday, October 18, 2004 11:12:27 PM afxpress.com WASHINGTON (AFX) -- U.S. consumer prices likely rose at a modest rate in September, economists say. The Labor Department will report on the latest consumer price index on Tuesday at 8:30 a.m. It's the highlight of the week's economic data calendar. Traders also will be keeping a close watch on Federal Reserve Chairman Alan Greenspan, who will speak on consumer debt to a bankers' group in Washington The CPI is expected to rise 0.2 percent in September, while the so-called core rate (which excludes food and energy) also is expected to rise 0.2 percent, according to a survey of 37 economists conducted by CBS MarketWatch. The CPI and the core CPI both rose 0.1 percent in August. "The CPI looks likely to turn a bit less friendly," said Susan Hering, an economist for UBS. "But reactions could be muted as markets anticipate Greenspan, who most recently highlighted the potential drag on growth from rising oil prices." If inflation does spiral out of control, oil will be the culprit. Already, economists see higher energy prices pushing up the October CPI by 0.2 or 0.3 percentage points. Economists disagree about the impact of oil prices in September, however. Retail gasoline prices didn't start accelerating until the middle of the month, so it's not clear whether prices rose or fell for the month as a whole. Outside of energy, the inflation picture remains muddy. Prices for some goods continue to fall, while prices of many services are climbing. Auto prices, for instance, likely plunged in September as automakers offered a record $3,146 per car in buyer incentives The impact of higher oil prices of the general price level could be muted, especially if prices don't go higher. Few firms have pricing power and workers are in no position to demand higher wages. Fed officials will be watching the core CPI closely. The Commerce Department will report on September housing starts at 8:30 a.m. on Tuesday as well. Economists believe starts slowed to a 1.93 million annualized pace in September from 2.0 million in August.