By Utta Von Nuremburg

WASHINGTON (MNI) – The release of the November Consumer Price Index
report Wednesday morning is expected to show a modest boost to the
overall number from higher energy and food prices, similar to that seen
in Tuesday’s November Producer Price Index data.

A survey of economists by Market News International have centered
on a rise of 0.2% in the headline figure, following gains of 0.2% in
October and 0.1% in September.

According to Kim Rupert, managing director of global fixed income
analysis for Action Economics, “our outlook has not changed per today’s
PPI report. We should see in tomorrow’s report a reflection of higher
food prices and other commodities prices.”

The rise in October’s CPI headline number was largely attributed to
the energy complex, in particular the gasoline index, which rose 4.6%,
the fastest pace since July and following a 1.6% increase the month
prior. Positive contributions from the household energy, electricity and
fuel oil indices were offset by a 0.4% decline in natural gas prices.

After remaining relatively tame since May, the food index in
October’s CPI report posted a 0.1% rise, due in part to higher prices in
the food away from home index. The food at home index remained
unchanged.

In today’s November PPI report, the index for finished consumer
foods prices advanced 1%, after falling 0.1% in September. Much of this
can be attributed to higher prices for fresh fruits and melons, which
climbed 13.6%. A surge in prices for eggs for fresh use also contributed
to the advance in the finished consumers’ food index.

The November PPI report also revealed a rise of 2.1% in the price
of finished energy goods, with higher gasoline prices leading the
advance, rising 4.7% while home heating oil prices rose 7%. Excluding
energy, November’s PPI would have gained 0.4%, reversing last month’s
0.4% decline.

Stripping out the volatility in the food and energy sectors,
October’s core CPI figure is expected to be subdued once again, posting
a modest 0.1% increase after remaining flat for three consecutive months
and falling 0.1% in July.

Core inflation on an annual basis slowly climbed 0.6% in October —
the lowest 12-month increase.

“Core CPI may be slightly held back by the shelter component”,
Rupert said in during a telephone interview, with Action Economics
predicting a 0.1% rise in Wednesday’s core CPI number.

The CPI Housing Index, which accounts for 42% of the CPI headline
figure, has remained relatively unchanged over the last nine months. It
was flat in February, March, May and August; saw 0.1% declines in April,
June, July and September; and a rise of 0.1% in October. Rents, one of
its main components, showed a 0.1% uptick in October after an uptick of
0.1% the month prior.

–Utta Von Nuremburg is a Reporter for Need to Know News in Washington

** Market News International Washington Bureau: 202-371-2121 **

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