The Labor Department's Bureau of Labor Statistics announced today that the Producer Price Index (PPI) for Finished Goods rose 0.3 percent during January.

The finished goods PPI is a measure of the selling prices of goods when they are first ready for sale to the ultimate consumer. It does not include costs of transportation and distribution and retail sales. The PPI covers prices received by the manufacturing, mining, agriculture, forestry, fishing, natural gas, and electrical power industrial sectors.

While the 0.3 percent increase is modest in itself, the PPI change for January reduces all the way to -0.1 percent when the effects of the the volatile food and energy sectors are removed. Month-to-month changes in food and energy prices are sometimes large. So, on a month-to-month basis, it is common practice to subtract the contributions of these components and examine the resulting "core" rate change.

On a year-to-year basis, the variations in food and energy tend to average out. So, the 12-month change in the PPI for all finished goods provides a meaningful measure of producer price changes. For the year ending January 1996, the finished goods PPI rose 2.3 percent.

Also today, the Commerce Department's Bureau of the Census released its advance estimate of seasonally-adjusted retail sales for January. In January, retail sales declined by 0.3 percent. This follows a revised gain of 0.6 percent in December. Excluding the contribution of volatile auto sales, January was unchanged from December, and the December change was only +0.3 percent.

Comparing January sales with the previous January shows a gain of 3.0 percent. This year-to-year change figure has been trending steadily downward since March of 1994 when it stood at slightly more than 10 percent.

In other news today, the 5000 consumers surveyed by the Conference Board in February were a lot more confident than the 5000 surveyed in January and only a little less confident than the 5000 who were surveyed in December.

If you're wondering what the heck I'm talking about, let me explain. Every month, the Conference Board sends out questionnaires about consumer sentiment to a different, albeit scientifically-selected, group of 5000 households. From the questionnaire responses is generated, among other things, the widely-reported Conference Board monthly Consumer Confidence Index.

In December the Index reading was 99.2, in January it crashed to 88.4 (revised), and, in February, the Index soared all the way back up to 97.0. If you didn't know how this survey was conducted you might be tempted to ask, "Why don't those people make up their minds?" But, since this month's people are not the same people as last month, or, for that matter, any other month, then we can't ask the question in this way.

More precise, would be a question as to why the opinions of these different scientifically-selected cross sections of the consuming public differed so widely from month to month. Well, we have to remember that these people are just that -- people. And, they are being asked how they feel about the way things are going in the country at the time they fill out the questionnaires. So, its not hard to imagine that, from one month to another, different bunches of people feel differently.

To further emphasize this point, the people surveyed by the University of Michigan in its February poll of consumer attitudes were less rather than more optimistic than the group surveyed in January.

ABC News and Money Magazine conduct yet another survey of consumer sentiment. At no time since 1986, have more than half of the people they surveyed felt positively about the national economic situation.

So, there seems to be a consumer sentiment poll that will support almost any opinion about the economy.

The point of all this is that it is probably not a good idea to make financial decisions based on opinion polls. They're too subjective. Better to hang your investment hat on some hard numbers like those available in today's reports on retail sales and the PPI.

Byline: Lafferty (MF Merlin)