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"The best economist is an active market participant: one who practices what he preaches."  David Brady is a bond portfolio and currency risk manager who has spent several years working in the financial sector, both in Europe and the States.  "Awareness of the state of the economy should be the starting point for any investment decision.  Analyze economic statistics and judge for yourself what is happening in the U.S. economy today and tomorrow."

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Inflation PDF Print E-mail
Tuesday, 20 January 2009

Core CPI

The Consumer Price Index (CPI) measures the prices of consumer good and is considered one of the most important indicators of inflation. The core index, which excludes volatile food and energy prices, is the more closely watched.

Market Effect: Strong
Indicator of Inflation: Strong

Core PPI

The Producer Price Index is the cost of goods at the factory level. The core figure excludes volatile food and energy prices. Producer prices can be a good leading indicator of consumer prices of companies can pass on the higher costs of production to consumers, which is not always the case, depending on the competitive environment and prevailing economic conditions.

Market Effect: Moderate - Strong
Indicator of Inflation: Moderate

ISM Price Index

The ISM Manufacturing Price Index is one of the earliest and best indicators of producer price inflation and is part of the survey of purchasing managers in the manufacturing sector.

Market Effect: Moderate
Indicator of Inflation: Moderate

Core IPI

Import Prices are indicative of the level of inflation being imported into the country via the purchase of foreign goods and are one of the earliest indicators of potential inflation issues even though they constitute a small part of the producer price index. They are heavily influenced by the strength of the dollar on foreign exchange markets.

Market Effect: Weak
Indicator of Inflation: Moderate - Weak