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May 17, 2005

Pricier cars

Amey Stone

The producer price index came in higher than expected today. Wholesale price inflation rose by 0.6% vs. the consensus estimate of 0.4%. Not surprisingly, stocks are selling off today on inflation worries.

One of the most interesting line items in the report was a surprise hike in auto prices. Passenger car prices rose 0.5% -- the first increase in three months.

If you read my post from April 27, "Car Prices on the Way Up," that wouldn't have been such a surprise.

Here's what Merrill Lynch economist David Rosenberg wrote about pricier cars today:

"This is a bit surprising as incentive spending, especially by Asian OEMs, remained high in April. However, the incentives may have been at the dealer level and did not stem from the manufacturer. Still, this may be an area that surprises to the high side in tomorrow's CPI release."

01:02 PM


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