News Column

Producer and Consumer Price Index Reports Coming

Dec. 13, 2012

By Matt Krantz

Investors who have predicted for years that nasty inflation is looming will likely find out, again, how wrong they've been.

Today and Friday, two key benchmarks of price levels, the producer price index and the consumer price index, are due out. And again, economists expect muted price changes.

The PPI lands today. It's a measure of wholesale prices and is expected to fall 0.5% for November, Briefing.com says. The CPI, out Friday, sizes up prices paid by consumers. It's expected to fall 0.2% for November.

Even the so-called core CPI, which omits prices for food and fuel, is expected to rise just 0.1%.

Such muted price changes stymie investors who have been betting, largely by investing in commodities such as gold, that aggressive actions by central banks would spark inflation. SPDR Gold Shares, an exchange traded fund that mirrors the value of gold, has risen 9.1% this year. That may sound impressive at first, but it means gold is lagging behind the 13.6% gain by the Standard & Poor's 500, which doesn't even include the latter's 2% dividend yield.

And without any signs of inflation, the Federal Reserve will be free to make moves to jog the economy. Stocks initially rose Wednesday after the Fed said it would buy $45 billion a month worth of Treasuries. But the rally faded, and stocks ended mixed after Chairman Ben Bernanke said the Fed does not have tools to fend off damage from automatic tax increases and budget cuts if Congress doesn't act by Dec. 31.


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Source: Copyright USA TODAY 2012


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