By Chris Cermak
WASHINGTON (MNI) – Headline U.S. inflation is expected to have
eased a little in September compared to August, but a still-high
reading could push the annual rate to its highest level in three years.
The Consumer Price Index out Wednesday is expected to post a 0.3%
gain month-over-month, according to a survey of economists by Market
News International. That would be down from 0.4% in August, but would
indicate a year-over-year rate of 3.9%.
September’s easing of monthly headline pressures, the result of oil
prices coming off highs, should not mask the steady gains in the cost of
core consumer goods, which are slowly being pushed up by producers that
are running out of ways to avoid passing on their own higher costs.
Core CPI is expected at 0.2% for September, the same as in August,
according to the MNI survey. That would push the core price index over
the past 12 months to 2.1%, the highest since October 2008 and just
above the Federal Reserve’s unofficial target inflation rate of 2%.
“I think we are witnessing today a very broad and what I would call
moderate increase in inflationary pressures,” Ken Mayland, president of
Clearview Economics, said in an interview with Market News
International.
Producer price data due out Tuesday are expected to show a 0.3%
increase in September, according to the MNI survey, after coming in flat
the month previous. The core rate is expected at 0.1%. Year-over-year
PPI stood at 6.5% in August, with core rising to 2.5%, the highest since
June 2009.
“I think we’re already seeing the pass-through, but it’s not always
visible in the price of everything,” said Mayland, noting that
productivity gains and lean inventories have so far limited pass-through
to CPI. But “the inflationary pressures that are building in the
pipelines, they’re too great these days for the increases in technology
to offset them.”
Headline CPI is expected to be driven up by higher-than-seasonal
gas prices, while higher rents could drive up the core rate, according
to an analysis by Credit Suisse.
Despite the inflation gains, the Federal Reserve has said it
expects prices to moderate in the coming quarters as the sharp commodity
gains from earlier this year are steadily erased. That reading of
inflation’s trend allowed the Fed to announce Operation Twist in
September to help stimulate a weak economy and employment situation.
PPI will be released Tuesday at 8:30 a.m. ET and CPI Wednesday at
8:30 a.m. ET by the Labor Department.
— Chris Cermak is a Washington reporter with Need to Know News
** Market News International Washington Bureau: 202-371-2121 **
[TOPICS: M$U$$$,MAUDS$]