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Latest PPI Numbers Make Fed Rate Hike Less LikelyAired July 14, 2000 - 1:04 p.m. ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANDRIA HALL, CNN ANCHOR: The latest economic reports show inflation at the wholesale level rose in June, pumped up by a spike in energy costs. But the increase didn't stop Americans from opening their wallets.
With a look now at the numbers and what they could mean for interest rates, here's CNN's Bob Beard.
BOB BEARD, ANN CORRESPONDENT (voice-over): Soothing news for anyone fearing inflation is back: wholesale prices, as measured by the Producer Price Index, did rise 0.6 percent last month, but without volatile food and energy costs in the mix, the PPI was actually down slightly.
Some economists said the Federal Reserve will find the numbers reassuring.
BILL SULLIVAN MORGAN STANLEY DEAN WITTER: It suggests that competitive price pressures are still in place. Namely, we have evidence that energy prices are starting to move lower here in the month of July.
BEARD: Competitive pricing is helping fuel modest gains in retail sales. They rose one half of one percent in June, as surging gas prices didn't stop consumers from snapping up cars. But rising interest rates hurt sales of building materials and furniture.
Many economists say today's reports make it less likely the Fed will raise interest rates at its policy meeting next month.
STAN SHIPLEY, MERRILL LYNCH: We do not think the Fed will hike in August. In fact, we think the Fed is done tightening for the year.
BEARD: And in another snapshot showing a possible economic slowdown, the Federal Reserve said June production at the nation's mines, factories and utilities rose at its slowest rate in nine months.
(on camera): Economists and the markets are now poised for a more important inflation reading: consumer prices, due out on Tuesday.
Bob Beard, CNN Financial News, Washington. (END VIDEOTAPE)
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