AP Reporter Hypes Wholesale Inflation

     Wholesale price inflation in 2005 was the worst in 15 years, warned Associated Press reporter Martin Crutsinger in two reports on the year-ending producer price index (PPI) numbers released January 13 by the Bureau of Labor Statistics. But Crutsinger downplayed the big story: despite spikes in oil prices, inflation hasnt slammed consumers with high prices. The cost of wholesale goods aside from fuel and food in 2005 increased less than 2 percent.

     The AP economics writer opened his January 14 article noting gasoline prices rose at the fastest pace since 1990 and began a January 14 report published in the Washington Post focused on a 5.4-percent increase in wholesale prices in 2005, 0.3 percentage points shy of the 5.7 increase in 1990.

     But two days later on the front page of Investors Business Daily, reporter Laura Mandaro led off her January 16 article with the flipside of the situation: Businesses continued to refrain from passing on higher wholesale energy costs in December. Mandaro noted that core inflation, which excludes volatile energy and food price fluctuations, rose a modest 0.1% for the month of December, adding later that core prices rose just 1.7%, the smallest gain in more than a year.

     While Crutsinger reported that the Federal Reserve would likely enact two more quarter-point rate hikes in the next few months, Alister Bull of the Reuters news wire emphasized how low core inflation rates could prove a favorable sign on interest rates. Bull wrote in his January 13 report that producer prices were well contained excluding food and energy costs news likely to reassure the Federal Reserve it does not need to raise interest rates much further.