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Inflation watch, day two

John Dimsdale Oct 18, 2006
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Inflation watch, day two

John Dimsdale Oct 18, 2006
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SCOTT JAGOW: Today, we’ll find out how much we paid for things in September. That’s retail inflation. Yesterday, the government said wholesale inflation was up six-tenths of a percent when you take out food and energy prices. That triggered some concern on Wall Street about a possible return to interest rate hikes. Marketplace’s John Dimsdale tells us what we can expect today.


JOHN DIMSDALE: The inflation in the yesterday’s core producer price index was caused largely by a sharp increase in car prices at the factory level.

Those will take a month or two to reach the showroom floor, co today’s core consumer price index won’t necessarily rise as much.

However, the core CPI will likely be influenced by rents which have been going up.

Global Insight economist Brian Bethune says a slow down in housing construction is causing a shortage of rental property.

BRIAN BETHUNE: More households are looking at a rental option either because affordability in the housing market is just out of reach or they’re just fearful of actually going into the housing market at this point.

Despite higher than expected inflation, Bethune predicts the Federal Reserve Board will still see a slowing economy and therefore won’t hike short term interest rates at next week’s meeting.

In Washington, I’m John Dimsdale for Marketplace.

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