Tracking the Producer Prices to Bring The Next Test of Inflation Rate
NEW YORK -- The April producer price index due out Friday will take the temperature of inflation, which many economists believe is rising.</br></br>Analysts figure the index rose for the second month in a row, although possibly at a slower rate than March's 0.6% gain. MMS International, a Redwood City, Calif.-based research firm, says its poll shows an increase of 0.3% to 0.6% is expected.</br></br>Excluding the volatile food and energy sectors, the index has been rising steadily this year at a "disconcerting rate" of about 0.4% a month, economists at Merrill Lynch & Co. say. That pace, among other things, prompts them to expect an annual inflation rate of about 5% by year end.</br></br>Few are predicting a return to the double-digit inflation that plagued the economy in the late 1970s, but many economists say signs of mildly troublesome inflation are mounting. For several years now, inflation as measured through the consumer price index has been mild. It started to decline after reaching 13.5% in 1980, slid to 10.3% the following year and to 6.2% in 1982. It was 3.6% last year after slowing all the way down to 1.4% in 1986.</br></br>These days, "the biggest 'fin in the water' is the purchasing managers' data," Donald H. Straszheim, chief economist at Merrill Lynch, says.