DATA SNAP: US PPI Rises Less Than Expected In October
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Oct Producer Price Index ! Consensus: !
! Overall: +0.6% !
Key Numbers: Oct Sep !
PPI Index: +0.3% -0.6% ! Actual: !
Core Index: -0.6% -0.1% ! Overall: +0.3% !
Intermediate: +0.3% +0.2% ! Core: -0.6% !
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By Luca Di Leo
Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)--U.S. wholesale prices rose by less than expected in
October on higher food and energy prices, in a sign that core price pressures in
the economy remain subdued.
The producer price index for finished goods rose 0.3% on a seasonally adjusted
basis in October, the Labor Department said Tuesday, after falling by 0.6% in
September.
Last month's rise was smaller than the 0.6% increase predicted by economists
in a Dow Jones Newswires survey. PPI was down 1.9% from October 2008.
The data on wholesale inflation should give the Federal Reserve continued
ammunition in trying to support the economic recovery by keeping interest rates
at a record low close to zero.
Core PPI, which excludes volatile food and energy prices, fell 0.6% last month
compared to September.
Federal Reserve Chairman Ben S. Bernanke Monday said that, even though
commodity prices have risen recently as the U.S. dollar depreciated, inflation
is likely to remain subdued for some time.
Some economists argue the weaker dollar and rising oil prices are early
warning signs that inflation will quickly spiral out of control. Others,
including Bernanke, stress that slack in the economy and low labor costs are
likely to keep prices in check.
In his first official speech since the Fed voted Nov. 4 to hold its key
interest rate at a record low, Bernanke Monday repeated that the central bank
expects to keep its fed-funds target rate close to zero for an "extended period"
in the face of high unemployment and low inflation.
The Fed chief also said that core inflation, inflation expectations and
unemployment will guide the central bank's decisions on interest rates.
"On net, notwithstanding significant crosscurrents, inflation seems likely to
remain subdued for some time," Bernanke said.
Tuesday's PPI data showed a 1.6% rise in energy prices in October after a 2.4%
decline the previous month. The October rise in energy prices was led by rising
gasoline prices, which moved up 1.9%. Rising prices for residential electric
power and liquified petroleum gas also contributed to the October increase.
Food prices were also up, by 1.6%, as the index for fresh and dry vegetables
jumped 24.2%.
-By Luca Di Leo, Dow Jones Newswires; 202-862-6682; luca.dileo@dowjones.com
(END) Dow Jones Newswires
11-17-090845ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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