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News > Economy
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U.S. prices unchanged
graphic December 14, 2001: 11:31 a.m. ET

Core prices post biggest jump since '96; inventories, production fall.
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  • Special Report: Eyes on the Fed
  • U.S. wholesale prices fell in November - Dec. 13, 2001
  • CPI falls in October; core CPI rises - Nov. 16, 2001
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  • Consumer Price Index Summary
  • Federal Reserve
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    NEW YORK (CNN/Money) - Consumer prices were unchanged in November, the government said Friday, but excluding often volatile food and energy products, prices posted their biggest increase in almost six years.

    The Labor Department said the Consumer Price Index, the government's main inflation gauge, was flat, versus economists' forecasts for a 0.2 percent drop, according to Briefing.com. CPI fell 0.3 percent in October.

    Excluding often volatile food and energy prices, the so-called "core CPI" rose 0.4 percent, the biggest increase since January 1996. That was above analysts' forecasts for a 0.2 percent rise, and followed a 0.2 percent gain in October.

    Worries about inflation can prompt the Federal Reserve to raise interest rates to slow growth and keep prices in line. But when the Fed cut short-term rates for the 11th time this year on Tuesday, it indicated it was still leaning toward additional rate cuts due to the continued weakness in the U.S. economy.

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    The continued weakness in the economy was further demonstrated when the Federal Reserve released data Friday that industrial production fell 0.3 percent in November. That's somewhat better than the revised 0.9 percent decline posted in October. The Fed had previously put the October decline at 1.2 percent.

    The nation's factories operated at 74.7 percent of capacity in the month, down from the 75 percent rate in October.

    One economist said even Friday's CPI report isn't likely to get the Fed thinking about an end to its inclination toward lower interest rates.

    "It is a bit of a surprise," Bill Cheney, chief economist for John Hancock Financial Services, told CNNfn's Before Hours. "There just isn't any real inflationary pressure in the economy. Even if you get one bad month, with the economy this weak, you really can't have an inflation problem."

    Energy prices fell 4.4 percent in the month after a 6.3 percent decline in October. Transportation prices fell 1.5 percent. The "other goods and services" category showed the biggest increase with a 1.3 percent rise, followed by a 0.5 percent increase in medical costs.

    Separately, business inventories fell 1.4 percent in October, driven by plunging stocks at retailers and auto dealers, the Commerce Department said.

    For more on the Fed and rates, click here

    The department said the drop in inventory was the largest decline since 1992. Record new car sales in October, prompted by zero-interest financing incentives, led to a record 8.9 percent decline in auto inventories during the month.

    On Wall Street, investors showed little reaction to the latest data.

    Business inventories fell 0.6 percent in September, and analysts had been looking for a 0.5 percent decline in October. While Cheney said the auto numbers skewed the October report, overall the data were encouraging news for the U.S. economy.

    "The bottom line is the more inventories get depleted, the sooner we're going to have to start producing again, even for the relatively low level of demand that businesses are facing today," he said. "I think it does bring the recovery story more into focus and make it more realistic to expect growth, let's say, in the first quarter." graphic

      RELATED STORIES

    Special Report: Eyes on the Fed

    U.S. wholesale prices fell in November - Dec. 13, 2001

    CPI falls in October; core CPI rises - Nov. 16, 2001

      RELATED LINKS

    Consumer Price Index Summary

    Federal Reserve





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    Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.

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