There was certainly no inflation to speak of in yesterday’s (December 15) consumer price data. The headline Consumer Price Index (CPI) climbed a scant 0.1% in November. The core inflation rate, which excludes food and energy prices, rose 0.1%.
This puts the annual headline inflation rate at 1.1% and year-to-year increase in core prices at 0.8%. That core rate is actually up from the 0.6% annual rate, the lowest in the 52-year history of the index, recorded in October.
What inflation there is showed up in the prices of individual objects in the market basket used to calculate inflation. Egg prices, for example, climbed 6.6% in the month and prices for fresh fruits rose 2%. Airline fares gained 3%.
Nothing in these numbers, in other words, to make the Federal Reserve rethink its policy of quantitative easing and the purchase of $600 billion in Treasury bonds by the end of June. The Fed has a target of 2% to 2.5% inflation and the economy is a long way from that.
But there continue to be signs that the economy is picking up. Industrial output rose at a 5.4% annual rate in November. Industrial output had dipped in October.
I’m amazed that anyone still believes the government’s statements about inflation, and even more amazed that many otherwise sophisticated people actually buy “TIPS” based on those statements.
In November, Casey Research did a chart that shows year-over-year changes of real things vs the CPI that has long been jimmied to keep gov’t obligations on Soc Sec, etc. down:
According to them, as of Oct 2010 YOY these are up:
Wheat 74%
Corn 14%
Canola 36%
Heating Oil 29%
Gas 25%
Nat Gas 15%
Beef 18%
Pork 60%
Coffee 25%
Sugar 44%
Cotton 66%
Copper 37%
Gold 31%
Silver 36%
…and CPI-U only showed a YOY gain of 1.1%
No inflation? Jim do you seriously believe that? Prices are up on food items (not to talk of reduced quantities in the packaging), I see able-bodied people standing on every corner of intersections begging for hand outs. My utility bills have jumped by a rough average of 25% for electric and gas and water. I am thinkin of doing a documentary on my life called “The Incredible Shrinking Paycheck”
No inflation? I beg to differ.
I work for an extremely well known retailer of consumer electronics. This company is continually jacking the prices of its accessories up. Earlier this year they raised the prices of their already overpriced batteries for cordless phones from 30-40%. Their rip off service plans went up 16% with the accompanying memo that the company was monitoring the increase to watch the customer reaction. Prior to the holidays they raised the price of a remote control battery pack 50% and then later posted signs offering a fantastic deal for the old price if you bought other merchandise. TV cables were all raised to serious multiples of what you can find online for a fraction of the cost. No inflation? Says who?
Jim,
Real life expenses are up. Gasoline near $3/GALLON, in December. Beef, corn, OJ all up(food). Health care premiums and education expenses are also up. How long until these expenses eat into our nascent recovery?