By Utta Von Nuremburg

WASHINGTON (MNI) – Wednesday morning’s release of the October
Consumer Price Index report by the Department of Labor is expected to be
boosted by higher energy prices, as was evident in Tuesday’s release of
the Producer Price Index.

A survey of economists by Market News International have centered
on a rise of 0.3% in the headline figure, following a 0.1% gain in
September and an of increase of 0.3% in both August and July.

“Tomorrow’s headline gain will be supported by energy and food
prices as we continue witnessing their positive trend,” Sean Incremona,
economist at 4CAST Ltd. said in a telephone interview.

The rise in September’s headline number was partially attributed to
the energy complex, in particular the gasoline index, which rose 1.6%.
This was the third consecutive monthly increase and followed gains of
3.9% and 4.6% in August and July, respectively. However, September’s
rise was offset by losses in the indexes for natural gas, household
energy, and electricity.

After remaining virtually unchanged since May, the food index in
September’s CPI report posted a 0.3% rise in September, due in part to
higher prices in the food away from home and the food at home indexes.

However, in Tuesday’s release of the October PPI report, the index
for finished consumer foods dropped 0.1%, after climbing 1.2% in
September, much of which can be attributed to lower prices for fresh and
dry vegetables and beef and veal at the finished goods level.

The PPI report also revealed a rise of 3.7% in the energy complex
with higher gasoline prices leading the advance, gaining 9.8% and
liquified petroleum gas prices increasing 10.4%. However, without
counting energy October’s PPI would have fallen 0.4%.

Stripping out the volatility in the food and energy sectors,
October’s core CPI figure is expected post a modest 0.1% increase, after
remaining unchanged and slightly below September expectations.

“Core CPI is expected to remain subdued”, Incremona said, with his
firm 4CAST currently forecasting a 0.1% rise in Wednesday’s core CPI
number.

The CPI housing index, which accounts for 42% of the overall
headline figure, has remained relatively unchanged over the last eight
months — flat in February, March, and May, 0.1% declines in April,
June, July and September, and then flat in August. One of its main
components, rents, showed a 0.1% uptick in September, after reporting a
0.1% downtick the month prior.

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

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

[TOPICS: MAUDS$,M$U$$$]