By Chris Cermak

WASHINGTON (MNI) – Falling gasoline prices and easing pressures on
producers likely helped U.S. consumer prices moderate further in the
month of November, according to economists.

“Energy and commodity prices have stabilized since the middle of
the year,” economist Ryan Wang with HSBC told Market News International.
“That reduces the upward pressure on costs.”

The Labor Department’s Consumer Price Index is expected to be
unchanged in November after falling 0.1% in October, according to a
survey of economists by Market News International. Core CPI is forecast
to rise 0.1% for the second straight month, which would push
year-on-year core price gains back down to 2%.

Retail gasoline prices continued falling through November, with the
average price of all grades dropping to $3.37/gallon on November 28 from
$3.51 at the end of October, according to the Energy Information
Administration.

Headline producer prices due out Thursday are expected to rise a
modest 0.2% after dropping 0.3% in October, according to the MNI survey.
Core producer prices are forecast to climb 0.1% after recording a flat
reading last month.

The Federal Reserve in a statement after its rate-setting meeting
Tuesday said inflation had “moderated since earlier in the year” and
“will settle, over coming quarters, at levels at or below those
consistent with the Committee’s dual mandate.”

The expected easing of inflation comes despite a sharp rise in
energy import costs in November. The cost of fuel imports rose 3.6% over
the month, pushing up headline import prices 0.7%, the first gain in
three months and the most since April, according to Labor Department
figures Wednesday. The strain on producers had eased the previous month,
with the energy index falling 1.4% in October.

Outside of energy, Wang said he expects some continued upward
pressure to come from renting prices, with foreclosures still depressing
the housing market. That could be offset by some lingering unwinding of
motor vehicle prices in the aftermath of supply disruptions from the
Japanese earthquake earlier this year.

Imports excluding petroleum fell 0.2% in November, marking the
second straight decline after a run of monthly increases dating back to
July 2010.

The Producer Price Index will be released at 8:30 a.m. ET Thursday
and the Consumer Price Index will be released at 8:30 a.m. ET Friday by
the Labor Department.

— Chris Cermak is a Washington reporter for Need to Know News

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

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