Tuesday, August 15, 2006

Milder Inflation

Today’s low PPI report punches a big hole in the inflation story.

The core PPI is only 1.3 percent over the past year. Probably more important, the PPI ex-energy is 1.2 percent, compared to a 3.2 percent peak in early 2005.

Gold dropped over $6.

We’ll see about the CPI tomorrow. The key number to watch is the chain weighted CPI.