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German Retailers To Increase Food Prices By 20-50% On Monday

German Retailers To Increase Food Prices By 20-50% On Monday

Just days after Germany reported the highest inflation in generation (with February headline CPI soaring at a 7.6% annual pace and blowing away all expectations), giving locals a distinctly unpleasant deja vu feeling even before the  Russian invasion of Ukraine broke what few supply chains remained and sent prices even higher into the stratosphere…

… on Monday, Germany will take one step toward a return of the dreaded Weimar hyperinflation, when according to the German Retail Association (HDE), consumers should prepare for another wave of price hikes for everyday goods and groceries with Reuters reporting that prices at German retail chains will explode between 20 and 50%:

  • GERMAN RETAIL CHAINS TO INCREASE FOOD PRICES BY 20-50% FROM MONDAY

Even before the outbreak of war in Ukraine, prices had risen by about five per cent “across the product range” as a result of increased energy prices, HDE President Josef Sanktjohanser told the Neue Osnabrücker Zeitung on Friday. With Russia’s invasion hitting economies and the supply chain harder, yet another series of price increases is on the horizon.

“The second wave of price increases is coming, and it will certainly be in double figures,” Sanktjohanser warned, cited by The Local.

According to the president of the trade association, the first retail chains have already started to raise their prices in Germany – and the rest are likely to follow.

“We will soon be able to see the impact of the war reflected in price labels across all the supermarkets,” said Sanktjohanser.

Recently, popular retail chains such as Aldi, Edeka and Globus announced that they would be forced to raise their prices. At Aldi, meat and butter will be “significantly more expensive” from Monday due to price hikes from its suppliers.

…click on the above link to read the rest of the article…

The Fed Just Guaranteed a Stagflation Crisis in 2022 – Here’s How

The Fed Just Guaranteed a Stagflation Crisis in 2022 - Here Is How

Chair Powell leads a two day meeting of the Federal Open Market Committee (FOMC) held January 29-30th, 2019. Public domain photo courtesy of the Federal Reserve

I don’t think I can overstate the danger that the U.S. economy is in right now as we enter 2022. While most people are caught up in the ongoing drama of Covid-19, a real threat looms over the nation in the form of a stagflationary tidal wave. The mainstream media is attempting to place the blame on “supply chain disruptions,” but this is a misrepresentation of the issue.

The two factors are indeed intertwined, but the reality is that inflation is the cause of supply chain disruptions, not the result of supply chain disruptions. If we look at the underlying stats for price rises in essential products, we can get a clearer picture.

Before I get into my argument, I really want to stress that this is a truly dangerous time and I suggest that people prepare accordingly. In just the past few months I have seen personal expenses rise at least 20% overall, and I’m sure it’s the same or worse for most of you. Safe-haven investments with intrinsic value like physical precious metals are a good choice for protecting whatever buying power your dollars have left…

Higher prices everywhere

The Consumer Price Index (CPI) is officially at the highest levels in 40 years. CPI measurements often diminish the scale of the problem because they do not include things like food, energy and housing which are core expenses for the public. CPI calculations have also been “adjusted” over the past few decades by the government to express a more positive view on inflation…

…click on the above link to read the rest of the article…

Peter Schiff: The Inflation Freight Train

Peter Schiff: The Inflation Freight Train

December Consumer Price Index data came out on Wednesday (Jan. 12). Month-on-month, it was again even hotter than expected. Peter called it an inflationary freight train that the Fed’s “field of dreams” monetary policy will not stop.

“Transitory” inflation has now been running hot for a full year.

The year-on-year CPI was 7%. It was the biggest annual CPI increase since 1982.

Month-on-month, the CPI spiked another 0.5%. This was hotter than the consensus 0.4% projection.

Core CPI (stripping out food and energy — as if you don’t have to eat or put gas in your car) was up 5.5%.

Goods prices were up a staggering 10.7% That was the biggest 1-year increase since 1975.

Keep in mind, this is using the cooked government CPI formula that understates inflation. If the government was still using the formula that it used in 1982, inflation would be higher in 2021 than it was then. In fact, we’d have the highest level of inflation in history. According to ShadowStats, it would be just over 15%.

Based on the methodology the government uses to calculate housing prices (owners’ equivalent rent), housing prices were up 3.8% in 2021. Meanwhile, the actual home prices rose about 16.5%.  If you take owners’ equivalent rent out and put home prices in the calculation, 2021 CPI suddenly becomes 10%.

Some people have recently claimed we shouldn’t worry about inflation. They say that wages go up along with prices, so it’s basically a wash. But wages are not going up as fast as prices. Real wages (nominal wage increases minus CPI) were down 2.4% in 2021. That means even with your raise, you have lost purchasing power. And you’ve lost even more than the official numbers reveal. If you use an honest inflation measure, real wages were down somewhere in the neighborhood of 10.4%.

As Peter Schiff said, “Consumers are going to have to live in the real world, not in the government’s fantasy world.”

…click on the above link to read the rest of the article…

US Consumer Prices Soar At Fastest In 39 Years, Real Wages Tumble For 9th Straight Month

US Consumer Prices Soar At Fastest In 39 Years, Real Wages Tumble For 9th Straight Month

Consensus was convinced – with barely any outliers – that this morning’s consumer price index would print with an astonishing 7.0% YoY (and notably 7 of the last 9 releases have come in above consensus) and they nailed it with the 7% print at its highest since June 1982 (when ET was launched in the US)…

Source: Bloomberg

That is the 19th straight monthly rise in headline CPI and Core CPI also surged to its highest since Feb 1991 (printing hotter than expected at +5.5% YoY)

Source: Bloomberg

Under the hood, commodities, shelter, and new-and-used cars and trucks saw prices jump the most. Energy actually saw a modest 0.4% retracement (that will not be the case in January)…

Source: Bloomberg

The cost of putting a roof over your head is accelerating once again. Shelter inflation rises to 4.13% Y/Y from 3.84%, the highest since Feb 2007…

In fact, while Services inflation rose to +3.7% – its highest since Jan 2007 – Goods inflation soared 10.7% YoY – its highest since May 1975…

Source: Bloomberg

Finally, and perhaps most importantly for Main Street, real average hourly earnings fell (down 2.4% YoY) for the 9th straight month…

Source: Bloomberg

So the next time a politician tries to tell you to be grateful that your wages are going up or you can move to a new higher paying job, just remind him that the surge in the cost of living is outpacing wage gains, thanks to The Fed’s money-largesse and Congress’ lockdown policies and helicopter money have crushed the quality of life for millions.

Inflation and Gold: What Gives?

In the last Supply and Demand update, we discussed some different theories which attempt to explain what causes the gold and silver prices to move. We mentioned the:

“…attempt to hold up a famous buyer of metal, while ignoring the thousands of not-famous sellers who sold the metal to said famous buyer.”

Since then, Ireland has bought gold for the first time in over a decade. And predictably, most voices in the gold community see this as a bullish sign.

By the way, we did not see any data about the prices paid on what dates, but the articles on December 1 mention a series of buys over a few months. Assuming a few means two, it looks like Ireland may have paid more than the current price.

The Different Theories on What Moves Gold and Silver Prices

Back to the common bullish view of Ireland’s wisdom, what of the opinions of the 64,300 people who sold their gold to Ireland (assuming the average seller sold an ounce)? Surely, these people believed the price will go down?

Famous and Anonymous Price Movers

There are two competing theories for how to interpret the conflicting views when one market participant is famous and the other is a bunch of anonymous people. One is the “famous buyer” theory, and the other is the “incompetent bureaucrat” theory. The latter was used to explain the sale of half of Britain’s gold between 1999 and 2002.

How could we have known that the UK government was foolish to sell back then, and the anonymous 12,699,250 buyers were right? Whereas today, the Irish bureaucrats are right, and the 64,300 sellers are wrong?

This is just a bias towards bullishness.

…click on the above link to read the rest of the article…

 

“Peak Inflation Is Here”- Jim Rickards

“Peak Inflation Is Here”- Jim Rickards

Peak Inflation Is Here and Gone

Last week Stansberry Investor’s Daniela Cambone interviewed Jim Rickards and got his take on inflation. We think this is a solid interview and Jim makes some good reasonable explanations as to why inflation has done what it has. Rickards puts much of the blame squarely in two places: Supply chain problems, and Biden administration policies.

When asked: Why did used car prices go up? Rickards responded with ‘No new cars were available due to chip issues. People bought used cars.’

His explanation for energy problems is equally sensible. The push into clean energy was too fast and poorly executed. Smart energy companies took advantage of that, as did Russia’s Putin.

The thesis essentially is that money printed isn’t the cause of inflation. The sanitization of the printing via RRP and bond allocations dampen the inflationary effect. For Rickards, the supply chains and Biden Administration fiscal policies are the culprit.

The only area he did not touch upon was rents. That shoe has yet to drop fully. Will it be as easily explained? The other point he makes is the Fed may be raising rates into a recession. Enjoy.

Jim Rickards: We’ve Reached Peak Inflation; The Real Risk in 2022 and Why Cash Is Critical

“Expect inflation to come down very quickly,” due to incoming rate hikes expected from the Federal Reserve, says NYT best-selling author Jim Rickards.

You could see severe, “tightening into weakness,” with a potential of three rate hikes next year, he predicts with our Daniela Cambone during the premiere of this year’s series, Outlook 2022: The Tipping Point.

In order for gold to gain momentum and rise in price, “the dollar has to get weaker,” he says. Having money on the sidelines is vital, according to Rickards, in order to be nimble into the coming year.

…click on the above link to read the rest of the article…

Prices Climb At Fastest Pace Since 1982… But It Could Have Been Worse

Prices Climb At Fastest Pace Since 1982… But It Could Have Been Worse

Having surged faster than expected in 7 of the last 8 months, all eyes are on this morning’s Consumer Price Index as this is the last big release ahead of next Wednesday’s Federal Reserve decision, where Deutsche Bank economists (among many others) are expecting they’ll double the pace of tapering. Chair Powell himself reinforced those expectations in recent testimony, stopping just shy of unilaterally announcing the faster taper. Crucially, he noted this CPI print and the evolution of the virus were potential roadblocks to a faster taper next week.

And sure enough, CPI printed +6.8% YoY – right as expected and the fastest rate of increase since 1982…

Biden Starts To Freak Out About Soaring Inflation, Orders Economic Council To “Reduce Energy Costs”

Biden Starts To Freak Out About Soaring Inflation, Orders Economic Council To “Reduce Energy Costs”

When discussing today’s “shock” CPI report we said that it was just a matter of time before there is a wave of political blowback that will make the recent anti-democrat revulsion in Virginia and NJ seem like amateur hour. Specifically, we said that “the explosive inflation surge threatens to exacerbate political challenges for President Brandon as he seeks to pass a nearly $2 trillion tax-and-spending package and defend razor-thin congressional majorities in next year’s midterm elections.”

And most importantly, wage increases are NOT keeping pace with the soaring cost of living (real waged growth is negative)…

It took just a few minutes for this prediction to materialize because just around the time the market opened, Biden addressed the public and confirmed that unlike the Fed, he is finally starting to freak out about soaring prices, to wit:

… on inflation, today’s report shows an increase over last month. Inflation hurts Americans pocketbooks, and reversing this trend is a top priority for me. The largest share of the increase in prices in this report is due to rising energy costs—and in the few days since the data for this report were collected, the price of natural gas has fallen.

I have directed my National Economic Council to pursue means to try to further reduce these costs, and have asked the Federal Trade Commission to strike back at any market manipulation or price gouging in this sector.

And just how does Biden plan on pulling this directive straight out of communist China? Will he restart the Keystone XL pipeline; or will the US fund shale producers – that could be awkward in light of Joe’s faux environment concerns. Then again, it’s just optics confirming that in a time of near-record inflation, at least Biden’s talk remains extremely cheap.

…click on the above link to read the rest of the article…

Relief from High Prices Unlikely, Analysts Say Ahead of Consumer Inflation Data Release

Relief from High Prices Unlikely, Analysts Say Ahead of Consumer Inflation Data Release

With investors closely eyeing two major data releases this week on inflation—one on producer input costs and the other on consumer prices—Wells Fargo analysts say it’s unlikely sticker-shock-weary consumers will see relief as the persistent supply-side crunch will “keep fanning the flames on inflation in the near term.”

On Tuesday, the Labor Department will release data for October’s producer price index (PPI), which tends to front-run consumer inflation data as at least some production costs get passed on to consumers. Economists expect a year-over-year rise of 8.7 percent in the PPI inflation measure, which would be the highest reading in the history of the series. Last month’s PPI came in at 8.6 percent, a record high.

And on Wednesday, the Labor Department will issue figures for October’s consumer price index (CPI), a key measure of inflation from the perspective of end consumers of goods and services. Consensus forecasts predict a year-over-rise of 5.3 percent in the CPI inflation gauge for October, with the prior month’s rise amounting to 5.4 percent, near a 30-year high.

On a month-over-month basis, CPI is expected to clock in at 0.5 percent, according to consensus forecasts released by FXStreet, though Wells Fargo analysts expect inflation was running hotter.

“Consumer Price Index report for the month of October is unlikely to offer much of a reprieve on the inflation front,” Wells Fargo analysts wrote in a note, in which they predict a 0.6 percent month-over-month increase in the CPI index. “If realized, this would put headline CPI inflation at 5.9 percent year-over-year.”

…click on the above link to read the rest of the article…

Meat Prices on the Rise

(Image from Statistics Canada: Prices for meat products rise year over year in September)

Canada’s CPI rose 4.4% YoY this September, according to Statistics Canada. Every major sector saw gains, but meat prices spiked 9.5%, marking the fastest pace of growth since April 2015. Canada’s Food Price Report for 2021, released in December 2020, predicted that meat prices would rise 4.5% to 6.5% in 2021, a drastic underestimate. Dr. Sylvain Charlebois, project lead and Director of the Agri-Food Analytics Lab at Dalhousie University warned people that they should develop “immunity” to rising prices. “Immunity to higher food prices requires more cooking, more discipline and more research. It’s as simple as that.” Gaslighting the people to believe they need to change their lives, rather than government change their policy, is at play once again.

Let me remind you that Bill Gates and others have been advocating for a move to 100% synthetic beef. But his logic only applies to the “rich” countries such as the US and Canada. “Weirdly, the US livestock, because they’re so productive, the emissions per pound of beef are dramatically less than emissions per pound in Africa,” Gates said in an interview in February 2021. “So no, I don’t think the poorest 80 countries will be eating synthetic meat. I do think all rich countries should move to 100% synthetic beef. You can get used to the taste difference, and the claim is they’re going to make it taste even better over time. Eventually, that green premium is modest enough that you can sort of change the [behavior of] people or use regulation to totally shift the demand.” This ties into the climate change agenda and the idea that starvation can help us shift to zero CO2…

…click on the above link to read the rest of the article…

Peter Schiff: Stock Up Now! Inflation Could Get Very Ugly

Peter Schiff: Stock Up Now! Inflation Could Get Very Ugly

The price of pretty much everything is rising precipitously. The CPI for September came in above expectations with a month-on-month increase of 0.4%. Peter Schiff appeared on Unfiltered with Dan Bongino to talk about inflation in Joe Biden’s America. Peter said you should stock up now because things could get ugly really quickly.

Bongino pointed out that while wages are rising, they aren’t rising as fast as prices. Wages have risen 4.6% while inflation has surged by 5.4% — according to government numbers. Peter said that is typically the trend.

The price of labor never keeps up with the price of stuff.”

Peter said the real problem is during and after COVID, a lot of Americans stopped working.

Unfortunately, they didn’t reduce their spending because the government made the mistake of replacing the incomes they lost with new money that the Federal Reserve was printing. So, we were making fewer things to buy, but everybody had more money to buy stuff, and so, prices just went ballistic. And they’re going to keep going up.”

Bongino pointed out that the rich have accounts and hedge mechanisms to shield themselves from the impacts of inflation. But what does an average middle-class family do to avoid the financial apocalypse of inflation coming down the pike?

Peter said, first of all, remember that inflation is a tax.

So, when the Biden administration says they’re not taxing people that make less than $400,000, they’re hitting them with this huge inflation tax.”

So, how do you avoid it?

Peter said, “Stock up now!”

Buy the things that you think you may need a year from now, two years from now. Buy it now. Especially the stuff that is nonperishable…

…click on the above link to read the rest of the article…

We’re Living in a Chaos Economy. Here’s How to End It.

We’re Living in a Chaos Economy. Here’s How to End It.

small business bbq

The Federal Reserve has been increasing the money supply at an explosive rate. The federal budget, deficits, and the trade deficit are record levels. Governments, both foreign and domestic, have locked down people, restricting production and consumption. How should this be viewed by an economist?

There is clearly chaos in the economy, and hardly a day goes by when I don’t find unusual if not unprecedented situations in day-to-day economic life. However, many people and economists are either oblivious to the problems or in denial. Things are normal for them. Politicians are mostly in this camp. For economists and investment promotors, inflation is “transitory.” They don’t know how the economy works and they expect near perfection from the economy and entrepreneurs. This view is wrong.

The chaos is all too real for most others. Homemakers who spend household income are seeing their purchasing power shrink, their choices disappearing, and more of their time consumed stretching the family budgets. Christmas shopping will be worse than normal.

Chaos deniers are further entrenched in their experience by the mainstream media (MSM). The problems are either not reported by the MSM or are masked by aggregate statistics like price inflation, i.e., the Consumer Price Index, low unemployment, wage increases, and extremely high stock markets and real estate, especially housing prices. These stats make people feel good, or at least less nervous.

Below the government economists’ radar there is real economic suffering. Small businesses are hurting and going out of business. Based on Help Wanted signs I drive by every day, it is extremely difficult to hire employees or purchase inputs. One local BBQ restaurant recently had a sign that said, “Out of Chicken, Pork and Beef.”

…click on the above link to read the rest of the article…

If the Fed Can’t Hit It’s Inflation Target, Why Not Just Move the Goalposts?

If the Fed Can’t Hit It’s Inflation Target, Why Not Just Move the Goalposts?

The Fed has an inflation problem.

The CPI is running well above the mythical 2% target and there isn’t any sign that it will ease soon. To deal with this problem, the central bank should tighten its monetary policy. But that would create a whole new problem, given that it can’t tighten in this economic environment. So, what is a central banker to do?

Well, if the Fed can’t hit the target, how about just moving the target?

That idea is apparently seriously being considered.

In a Wall Street Journal article, Greg Ip floated the idea.

One strategy [Powell]—or his successor—should consider in that eventuality is to simply raise the target.”

Ip buys into Keynesian economic voodoo and thinks straitjacketing the Fed with a 2% inflation target will hinder job creation.

Why would higher inflation ever be a good thing? Economic theory says modestly higher, stable inflation should mean fewer and less severe recessions, and less need for exotic tools such as central-bank bond buying, which may inflate asset bubbles. More practically, if inflation ends up closer to 3% than 2% next year, raising the target would relieve the Fed of jacking up interest rates to get inflation down, destroying jobs in the process.”

In a sense, the Fed has already raised the inflation target. Not so long ago, it was a hard 2% target. But the COVID-19 pandemic gave the Fed just the excuse it needed to move the inflation goalposts.

Jerome Powell announced the shift to “average inflation targeting” during his Jackson Hole speech in August 2020. In effect, the Fed will allow the CPI to run “moderately” over 2% “for some time” to balance out periods where it runs under that level.

…click on the above link to read the rest of the article…

Peter Schiff: When It Comes to Inflation, We’re Just Getting Started

Peter Schiff: When It Comes to Inflation, We’re Just Getting Started

The July Consumer Price Index (CPI) data came out this week. For the first time, the numbers were in line with expectations, leading many mainstream pundits to declare “transitory” inflation is already starting to cool down. Peter Schiff broke down the report in his podcast. He said inflation is far from cooling off. In fact, when it comes to rising prices, you haven’t seen anything yet.

July CPI rose 0.5% month-on-month. This was in line with expectations for the first time this year. Every other CPI report had come in hotter than expected.

The year-on-year CPI came in at 5.4% – a high number, but in line with expectations. Core CPI, stripping out more volatile food and energy, charted below estimates at 0.3%.

Adding up the monthly CPI increases gives us a 4.1% inflation rate through the first seven months of 2021. As Peter pointed out, that’s more than double the Fed’s target of “slightly above 2%,” and we’re barely over halfway through the year. If you annualized the first seven months, you get around 7.2% inflation for 2021.

Clearly, nobody can define that as ‘slightly above.’ It’s more than triple 2%. I mean, it’s getting close to quadruple.”

And as Peter points out, it would be a lot worse if we had an honest measure of price increases.

I think if we measured inflation today using the same CPI we used to measure inflation in the 1970s, this year could end up being a worse year than any single year during the 1970s.”

More disturbing, Peter said this is just the beginning.

…click on the above link to read the rest of the article…

Shrinkflation, Inflation’s Sneaky Cousin, Is on the Rise

Shrinkflation, Inflation’s Sneaky Cousin, Is on the Rise

Doritos

Inflation has been on the rise for the past year and in the last few months it has accelerated. In June 2021, inflation, measured by the Consumer Price Index (CPI), hit the highest level since 2008. By inflation, economists refer to the increase in the general level of prices, which means that prices on average are increasing. The Bureau of Labor and Statistics (BLS) has a basket of goods and services that it tracks and uses to create a measure of the CPI. While inflation is the topic of the day in the news media and everyday conversations, many have not heard about its sneaky cousin, shrinkflation.

The term shrinkflation, is credited to British economist Pippa Malmgren, and refers to the shrinking weight of the products while the price for the package remains the same. This is in effect another form of inflation, since the per unit price of goods increases when products shrink. However, shrinkflation is trickier, since most consumers do not notice it (see here for a few examples of shrinkflation). Shrinkflation is an ongoing process, but we are seeing more of it in the past year, and especially the first half of 2021, as businesses scramble to catch up with increasing costs of production. Shrinkflation is so widespread today that there is a dedicated Reddit page for it.

Many complain about businesses resorting to shrinkflation and regard it as a sneaky way to increase prices. Yet many of the critics do not realize that businesses have no choice but to increase prices. Anyone who is paying attention to prices in the first half of 2021 will know that it is not only the price of consumer goods that it is increasing but also the prices of producer goods

…click on the above link to read the rest of the article…

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