Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, November 10, 1993 TAG: 9311100081
SECTION: BUSINESS PAGE: B-5 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
The Labor Department's Producer Price Index fell 0.2 percent. It measures prices paid by wholesalers and others to producers such as farms and factories.
In advance of Tuesday's report, economists were anticipating a 0.2 percent increase.
"The economy picking up at the end of the year is not contributing to a concomitant pickup in prices," said economist Martin Regalia of the U.S. Chamber of Commerce. "This report says that as of yet there is not a fundamental acceleration of inflation."
A good bit of the October performance came from a 3.9 percent seasonally adjusted drop in car prices, the largest decline since October 1972. But even without that, the index would have risen only 0.1 percent.
"It was helpful but not critical to a very benign report," said economist Bruce Steinberg of Merrill Lynch.
Unadjusted for seasonal variations, car prices actually rose 5 percent in October. That was a little more than half the typical 9 percent increase for the start of a model year, in part because dealers offered fewer price cuts on old models at the end of the summer.
October was the fifth time in six months that the producer index has failed to record an increase. It was up 0.2 percent in September after plummeting 0.6 percent in August.
Prices increased at a 0.4 percent annual rate from January through October, compared with 1.6 percent for all of 1992.
The Labor Department's Consumer Price Index, which unlike the producer index tracks the price of services as well as goods, is expected to show a moderate increase of about 0.4 percent in October, pushed up by new federal taxes on gasoline. That report is due out today. Through September, consumer prices had risen at a 2.5 percent annual rate.
In October, energy prices jumped 1.3 percent, including a 6.3 percent rise in gasoline costs, the largest in three years. Fuel oil rose 5.5 percent, but natural gas costs fell 2.3 percent.
Food prices fell 0.5 percent, pulled down by a 16.9 percent drop in vegetables.
Excluding the often volatile food and energy categories, prices fell 0.5 percent. The sharp adjusted drop in car prices was partly offset by a 1.1 percent increase in tobacco costs, which because of previous declines remained 22 percent below a year ago.
Prices also were down for newspapers and magazines, cosmetics, jewelry, furniture and women's clothing. They rose for electronic equipment, lawn and garden equipment, alcoholic beverages, books and glassware.
by CNB