Report Expected to Show Little Inflation

On Friday, the consumer price index report for September is scheduled for release before the market opens. With the U.S. economy slowing, though, investors say inflation is not an issue. The CPI rose 0.1% in August.

Subdued inflation may make it easier for Fed Chairman Alan Greenspan, testifying before Congress on Wednesday, to say central bankers remain ready to lower the benchmark overnight bank lending rate if necessary.

Businesses have “very little pricing power, so there is a big opportunity for the Fed to lower rates from where they are now,” said Steven Wood, chief economist at FinancialOxygen Inc. in Walnut Creek, Calif.

During the second quarter, the economy grew at the slowest pace in eight years. Surveys suggest the economy contracted in the third quarter and will contract again in the final three months of the year.

Other economic data this week:

* Today, the Commerce Department reports on business inventories during August.

* Tuesday, the Federal Reserve is scheduled to release its September report on production at U.S. factories.

* Wednesday, the Commerce Department reports on housing starts for September.

* Thursday, the Philadelphia Fed Bank is expected to report on manufacturing in southern New Jersey, eastern Pennsylvania and Delaware.

* Friday, the Commerce Department issues statistics on the U.S. trade deficit for August.