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Bah, inflation humbug

Scott Jagow Dec 19, 2006


SCOTT JAGOW: Like the ghost of Christmas future, the specter of inflation just keeps hanging around.

This morning, the Labor Department said wholesale prices shot up two percent in November. That’s the biggest jump in more than 30 decades.

Even if you take out volatile gas prices, it’s still the biggest increase in the Producer Price Index in 26 years.

But, says analyst Dana Soporta, we can’t jump to conclusions based on one month’s numbers.

DANA SAPORTA: The headline increase of 2 percent was startling for the PPI, but it really should be taken against the backdrop of really surprising weakness the previous two months. We had the PPI down 1.3 percent in September and down 1.6 percent in October.

Today’s number might keep the Fed up late at night, but Soporta says it doesn’t really change the Fed’s tack on interest rates.

SAPORTA: The Fed is in the same position it was before we saw the data this morning, which is that inflation is running slightly faster than they’re comfortable with but the economy is slowing down and they can afford to just wait and see how these two different forces unfold.

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