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PPI Report Shows Inflation in Check for Now

Thursday, 14 Jun 2007 | 10:03 AM ET

The producer prices, which the Labor Department reported Thursday as having risen 0.9% from last year, seem reasonable and will brace people for the consumer price index to be released Friday, according to two strategists.

On average, economists had predicted producer prices would rise 0.6%. Higher energy costs were seen as a key contributor to the slightly higher number. Excluding food and energy costs, which tend to be more volatile, prices paid rose a more moderate 0.2%.

PPI Reaction
A PPI reaction, with Michael Pond, Barclays capital fixed income strategist; Peter Dunay, Leeb Group chief investment strategist; Michael Farr, Farr, Miller & Washington and CNBC's Becky Quick

"These numbers look fine. They are roughly in line from what I saw," Leeb Group Chief Investment Strategist Peter Dunay said on "Morning Call."

He added that concerns about higher energy and agricultural prices are slowly working their way into the numbers, but "inflation isn't running away and the consumer still seems to be spending."

Barclays Capital Fixed Income Strategist Michael Pond is skeptical, nevertheless.

"Even if inflation may not be taking off just yet, the risks are clearly to the upside, down the road," Pond said.

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