What to watch: Reports give more inflation clues

• Consumer prices, factory data out Friday
• There's plenty of money sloshing around the system, but demand lacking
• So . . . don't fret over prospects of inflation for foreseeable future

The Bureau of Labor Statistics releases the November consumer price index Friday, which should show that inflation is flatter than your aunt's church choir. But the BLS will also release a good indicator of future inflation: capacity utilization.

Economists expect the CPI, the government's main gauge of inflation, to fall 0.2% from October, largely because of lower oil prices. Economists expect the CPI to have gained 0.2% excluding food and energy, according to Bloomberg News.

Inflation is too much money chasing too few goods and services, and there is plenty of money sloshing around the system. The Federal Reserve said Wednesday that it would continue its bond-buying program to keep long-term rates low. The money it's using to buy those bonds is coming largely out of thin air.

What there isn't plenty of is demand. Normally, companies would be eager to borrow at these rates and expand their operations. But a glance at capacity utilization rates shows why this isn't happening.

In October, factories were operating at 77.8% of capacity — in other words, 22.2% idle. There is little reason to open a new factory when current ones aren't running full tilt.

Economists expect Friday's capacity utilization number to creep up to 78%, hardly a number that will fan the flames of inflation. Until there's more demand for what factories make, it's unlikely anyone will be raising prices any time soon.