By TraderVox.com
Tradervox.com () – The market is expecting a report to be released today to show that the cost of living in US rose in September for the second month as energy expenses lead other small gains in goods and services. The consumer price index is expected to increase by 0.5 percent last month after climbing by 0.6 percent in the previous month. The core consumer price index is expected to have advanced by 0.2 percent. Another report on manufacturing is expected to show stabilization in the sector.
Safeway Inc and Abercrombie & Fitch Co. are among the companies that believe price increases are hard to achieve given the large number of unemployed Americans in the country. The rising fuel cost is also projected to have been taken a bigger percentage on the employees’ paycheck, leaving them with little to work with. The Federal Reserve embarked on an open-ended bond-buying program to help jump start employment. According to Omair Sharif, the increase in consumer prices is primarily due to the energy cost. Sharif, who is a US economist in Connecticut at RBS Securities Inc, noted that the core reading might be pretty tame, and the Fed is in a comfortable area to continue with its QE3 program.
The CPI report, which is expected to be released at 8:30 am in Washington by the Labor Department, is expected to gain by 0.1 percent to 0.7 percent. Another report at 9:15 am is expected to show that the industrial production did not improve enough to recoup what it lost in the previous month. The report is expected to show that the industrial production rose by 0.2 percent in September, following a 1.2 percent drop in August. According to Fed meeting held on September 13, the QE3 program is aimed at improving employment and the Fed is mandated to keep its target inflation rate of 2 percent. The unemployment fell last month to under 8 percent where it has been since the crisis started in 2009.
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