Your Money: Prices on the Rise?

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JOHN DEFTERIOS, CNN ANCHOR: For those who thought they were going to go out the week here on Friday quietly, think again. We also have an official read on inflation this morning.

DEBORAH MARCHINI, CNN ANCHOR: Christine Romans joins us now with a closer look at what that price reading is likely to show and what it likely could mean -- Christine.

DEFTERIOS: Morning.

CHRISTINE ROMANS, CNN CORRESPONDENT: Good morning, both of you.

Well, this was supposed to be the big report of the week, the PPI report, even more important than yesterday's retail sales report, and, now, it comes against a backdrop that has really become a little bit interesting with Mr. Greenspan's comments last night.

So taking a look at what the markets are expecting for that wholesale price report: They are a looking for a gain in the overall figure of about half a percent; excluding food and energy, they're looking for up, 0.4 percent.

Now, here are the factors that play in this number, it could be a little hard to read in the early going. Now, analysts and economists say that the inflation picture is very subdued, but there are some factors that could wreak havoc in this number. Among them, gas and fuel oil are expected to add maybe 2/10th of a percent to the overall figure; tobacco is expected to make about a three-percent increase in the core figure; tobacco prices, on the wholesale level, up more than 11 percent in the month; and cars, to a lesser extent, adding about 0.1 percent to this figure.

Now, none of these factors, analysts and economist are telling me, are indicative of an overall inflation problem. These are one month kind of events; they're are likely to wreak a little bit of havoc on these numbers. But one analyst told me that he expects that the market knows to look for these gains, and that, stripping it all out, you have to look for the true core rates. And the true core rate, he said, is flat to 0.1 percent, and that is something that would not worry the Fed. DEFTERIOS: Coming from historically low levels on commodities, and everybody seems to have forgotten that during this price rise. The other question, too: Is this going to be passed on to the consumer? Which is something that the Fed is watching.

ROMANS: Exactly. Well, first of all, in terms of where the trend is for wholesale prices, so far there's no indication that there will be anything passed on to the consumer yet. And as we see these commodity prices come up, analysts are going to be looking very closely to see if the intermediate or the crude prices in this wholesale number shows that there are a so-called "pipeline inflation."

And most analysts tell me, it's not there yet. That the reason that it is not is because these commodities are coming back from very, very low levels. If you look at oil, for example, it's up 86.4 percent year-to-date, but it's down this morning, and it's still off significantly from its historic levels.

So we're -- you can see that chart, it's just been a significant rally, but not really enough to worry economists yet.

MARCHINI: Christine, to here the Federal Reserve chairman tell it, he's less worried about commodity-price inflation than he is about asset-price inflation, specifically stocks.

ROMANS: Exactly. And that's what's really going to play with the market sentiment again today. We're coming -- where we are in this market, it's been very skittish, very emotional, and his comments will clearly have a very big impact this morning.

DEFTERIOS: It's the month of October, what is he talking about?

ROMANS: Exactly.

MARCHINI: Christine Romans.

DEFTERIOS: Christine Romans, yes, thanks a lot.

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