Saturday, June 10, 2000

Wholesale prices level


Index surprises analysts

By
The Associated Press

        WASHINGTON — Wholesale prices showed no change in May as lower costs for energy and food more than offset higher prices for cars and a record jump in the cost of books, according to government figures released Friday.

        The flat reading in the Labor Department's Producer Price Index, which measures inflation pressures before they reach consumers, surprised analysts, who had predicted that a rebound in energy costs would push up wholesale prices by 0.3 percent.

        “I don't see a lot of serious inflation in this report,” said Donald Ratajczak, director of Georgia State University's economic forecasting project.

        Outside the volatile energy and food categories, the “core” rate of inflation at the wholesale level rose 0.2 percent last month. slightly faster than many analysts were forecasting. In March and April, core prices rose by just 0.1 percent.

        Economists offered con flicting opinions as to whether the uptick in May's core rate was a worrisome harbinger of future inflation dangers.

        “This adds a new element of concern about inflation because a preponderance of items saw prices increasing,” said Paul Kasriel, economist with the Northern Trust Co.

        But Merrill Lynch economist Stan Shipley said that excluding the rise in car prices, the core CPI rose 0.1 percent, matching many analysts' expectations. “There is no significant inflationary pressure,” he said.

        The Federal Reserve has raised interest rates six times since last June.

        Economists have offered mixed opinions on whether Fed policy-makers will nudge up rates for a seventh time when they meet June 27-28.

       



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