Regulators, brokers try to prevent collapse of Refco and derivative contracts

Section:

By Ray Nutting
CBSMarketWatch.com
Friday, October 14, 2005

http://www.marketwatch.com/news/story.asp?tool=1&guid=B0B61F26-001E-
40EA-B7F7-48CBCE137892&siteid=bigcharts&dist=bigcharts&

WASHINGTON -- U.S. consumer inflation surged at the fastest pace in
more than 25 years in September, rising a bigger-than-expected 1.2%,
the Labor Department said Friday.

A record 12% rise in energy prices fueled the historic jump in
consumer price index, but core inflation -- which excludes food and
energy -- increased just 0.1%.

Energy goods and services accounted for more than 90% of the
increase in the CPI.

Economists were expecting the CPI to rise 0.9% and the core CPI to
rise 0.2%, according to a survey conducted by MarketWatch.

Consumer inflation has now risen 4.7% in the past 12 months, the
highest since 1991. Core inflation is up 2% in the past year, down
from 2.1% in August.

The report should keep the Federal Reserve on track for more
interest rates hikes at coming meetings. While the core CPI was
contained, that was largely due to several special factors unlikely
to be repeated in coming months, such as declines in hotel rates and
airfares

Core inflation remains the Federal Reserve's central concern. With
little power to control energy costs, the Fed must focus on keeping
rising energy costs from being accommodated by higher wages or
higher prices for other goods and services.

Wage pressures are nonexistent. In a separate report, the Labor
Department said average weekly earnings fell 1.2% after adjusting
for inflation. Real average hourly earnings are down 2.4% in the
past year, while real average weekly earnings are down 2.7%, the
biggest drop in 14 years.

In a separate report, the Commerce Department said retail sales
increased 0.2% in September, while sales excluding autos rose 1.1%.
Excluding both cars and gas, sales increased 0.6%.

The big story in the CPI was energy, which surged a record 12% after
Hurricanes Katrina and Rita devastated oil and gas production and
distribution from the vital Gulf Coast region.

Gasoline prices jumped a record 17.9%, while natural gas prices rose
12.1%. Fuel oil prices rose 12.7%. Energy prices are up 34.8% in the
past year.

Shelter costs fell 0.1% in September, holding the core CPI down in
September. Hotel and motel room rates plunged a record 2.5%, while
rents and homeowner equivalent rent both increased 0.1%. Many
economists were expecting an increase in hotel prices.

Food prices increased 0.3% on higher prices for fruits, vegetables
and poultry.

Medical care prices increased 0.3% and are up 3.9% in the past year.

Apparel prices fell 0.1%.

Transportation prices rose 5.1% on higher fuel costs. New car prices
rose 0.4%, while airfares fell 1.4%.

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