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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…

Inflation Soared to 6.8% in November

Inflation is soaring with no end in sight. The Consumer Price Index rose 0.8% in November, marking a 6.8% increase in inflation YoY. According to the Labor Department, this is the fastest pace of inflation since June 1982. In addition, Core-CPI rose 0.5% last month, amounting to a 4.9% annual increase, the quickest advancement since 1991.

Energy prices alone have spiked 33.3% in the past year, and gasoline prices are up 58.1%. Over the past 12 months, food and energy prices rose at the most rapid pace in 13 years. Shelter costs, amounting to one-third of CPI, rose 3.8% on an annual basis. This level has not been seen since the 2007 housing crisis wreaked havoc on the US real estate market.

Despite pay increases of 4.8% this year, real hourly earnings decreased 1.9% over the past 12-months. Service costs rose at the fastest pace since 2007 as well, advancing 3.4% over the past year. Apparel costs are also up by 5% since last November. Everywhere you look, prices are drastically rising.

Overall, the cost of living is astronomical. Basic necessities such as food and shelter price increases have caused more middle-class Americans to begin living paycheck to paycheck. The Federal Reserve claimed it would step in if inflation reached an unsustainable level. A 6.8% increase is unsustainable, inflation is not transitory, and neither the government nor the Fed has made a valid effort to control this growing problem.

And Just Like That, Inflation Is About To Disappear?

And Just Like That, Inflation Is About To Disappear?

Earlier this year, when inflation was still “transitory” two Fed chairs, Powell and Bernanke, made comments which we joked only make sense if the definition of inflation is changed:

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

Fed’s Lowest Lowball Inflation Measure Spikes to Worst-Hottest 31-Year High. Powell Groans and Mutters

Fed’s Lowest Lowball Inflation Measure Spikes to Worst-Hottest 31-Year High. Powell Groans and Mutters

But the Fed has now backed off its ridiculous claims and is taking inflation more seriously.

The lowest lowball inflation measure that the US government produces, “core PCE,” which excludes the now soaring food and energy prices and understates inflation by the most, is used by the Fed for its inflation target: a symmetrical 2% “core PCE.” And this core PCE in October, released today by the Bureau of Economic Analysis, spiked by 4.1%, more than twice the Fed’s inflation target, and the worst-hottest inflation reading since January 1991:

It’s not temporary, Fed Chair Jerome Powell groaned and muttered this morning upon seeing this inflation monster blow out, following his $4.5 trillion in money-printing in 21 months. Here he is, freshly re-nominated for another four years, viewing the problem of his own making that he will now have to deal with, by cartoonist Marco Ricolli for WOLF STREET:

The overall PCE inflation index that includes food and energy, the second-lowest lowball inflation measure the US government produces, spiked by 5.0% in October, the worst-hottest since November 1990:

There is hardly anyone left on Wall Street with professional experience in this kind of inflation.

And the Fed still has the foot on the gas, but just slightly less so, planning to print $105 billion from mid-November through mid-December to repress long-term rates, and it’s still repressing short-term rates to near-zero – blowing at nearly full speed through every red light at every intersection.

On a month-to-month basis, the overall PCE increased by 0.43% in October from September, the worst-hottest increase since May. This amounts to an annualized pace of 5.2% (12 x 0.43%).

If you think that a car will slow down on its own somehow when you floor the accelerator, you’re tragically mistaken, as the history of automotive accidents shows.

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

The Futility of Central Bank Policy

It is only now becoming clear to the investing public that the purchasing power of their currencies is declining at an accelerating rate. There is no doubt that yesterday’s announcement that the US CPI rose by 6.2%, compared with the longstanding 2% target, came as a wake-up call to markets.

Along with the other major central banks, the Fed’s reaction is likely to be to double down on interest rate suppression to keep bond yields low and stock valuations intact. The alternative will lead to a major financial, economic and currency shock sooner rather than later.

This article introduces the reader to some of the basic fallacies behind state currencies. It explains the misconceptions policy planners have over interest rates, and how central banks have become contracyclical lenders, replacing commercial banking’s credit creation for non-financial activities.

In effect, narrow money is being used by the major central banks in a vain attempt to shore up government finances and economic activity. The consequences for currency debasement are likely to be more immediate and profound than cyclical bank credit expansion.

Introduction

It is becoming clear that there has been an unofficial agreement between the US Fed, Bank of England, the ECB and probably the Bank of Japan not to raise interest rates. It is confirmed by remarkably similar statements from the former three in recent days. When, as the cliché has it, they are all singing off the same hymn sheet, those of us not party to agreements between our monetary policy planners are right to suspect they are doubling down on a market rigging exercise encompassing all financial markets.

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

Dollar Purchasing Power Plunges. Inflation +6.2%. For Urban Wage Earners +6.9%, Highest in 40 years, Most Monstrously Overstimulated Economy Ever.

Dollar Purchasing Power Plunges. Inflation +6.2%. For Urban Wage Earners +6.9%, Highest in 40 years, Most Monstrously Overstimulated Economy Ever.

Fed still printing money and repressing “real” interest rates to negative 6%, new vehicle prices spike by most since 1975, housing CPI jumps, food & energy soar.

The broadest Consumer Price Index (CPI-U) spiked 0.9% in October from September, and by 6.2% from a year ago, the highest since November 1990 (6.3%) and since 1982, according to data released by the Bureau of Labor Statistics today.

The Consumer Price Index for All Urban Wage Earners and Clerical Workers (CPI-W) spiked by 6.9% in October year-over-year, the highest since June 1982, nearly 40 years ago:

This CPI-W is the index upon which the Social Security COLAs are based, which are determined by the average during the third quarter. The Q3 average of 5.9% set the COLA for 2022 at 5.9%, the highest COLA since 1982, and there was some jubilation among beneficiaries a month ago. But now inflation is blowing right past that COLA.

As Atlanta Fed President Raphael Bostic pointed out, “transitory has become a dirty word.” This massive inflation occurred while the Fed still had its foot fully on the accelerator – $120 billion a month in money printing and near-0% short-term interest rates, meaning “real” short-term rates are at negative 6.0%.

The Fed has been saying over and over again ad nauseam for seven months that inflation will slow down somehow on its own, even as the Fed had the foot fully on the accelerator, and every step along the way, the Fed has grossly underestimated the surge of inflation, and continues to do so. The Powell Fed has unleashed a monster.

Here is Fed Chair Jerome Powell’s reaction to this inflation monster blowout, as captured by cartoonist Marco Ricolli for WOLF STREET:

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

Two Big Myths About Why Energy Prices Are Rising

Photo: Bridget Bennett/Bloomberg via Getty Images

The global economic recovery is running low on fuel. Chinese factories have been flickering on and off as Beijing rations electricity. Britons have been parking in petrol lines as their nation’s pumps run dry. Americans have turned on their president as spiking gas prices eat their wage gains. And the entire northern hemisphere is sweating the cost of keeping warm this winter.

High energy prices have long been the bane of the post-2020 recovery. But as the days grow shorter and the nights get colder, their salience is steadily rising. In recent days, Democrats and Republicans alike have called on Joe Biden to take immediate action to reduce the cost of energy. The former implored the president to bring down gas prices by tapping the nation’s emergency oil reserves. The latter chastised Biden for personally driving up energy prices by blocking new oil and gas drilling on federal land.

Meanwhile, fossil-fuel lobbyists and eco-socialists alike are casting the energy crunch as a byproduct of the world’s (slow and uneven) green transition. In their account, investors have been spurning new oil and gas production out of fear of future regulations, while renewables have failed to scale up fast enough to compensate. For oil barons, this narrative functions as an argument against stringent carbon pricing. For Marxists, it offers hope for an impending crisis of capitalism, as the old energy system dies and the new one struggles to be born.

Global energy markets contain multitudes. The price of oil internalizes myriad forces, from the financial to the macroeconomic to the geopolitical to the meteorological. So, one can tell a wide range of true stories about the energy crisis of 2021…

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

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…

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