Wednesday, July 16, 2008

What Inflation?

From the WSJ:

The consumer price index jumped 1.1% in June, the Labor Department said Wednesday. Excluding food and energy, it advanced 0.3%. Wall Street economists had expected a 0.7% rise in the headline and 0.2% core increase, according to a Dow Jones Newswires survey.

Unrounded, the CPI rose 1.056% last month. The core CPI advanced 0.323% unrounded.

Consumer prices swelled 5% on a year-over-year basis, the highest rate since May 1991. The core CPI grew a more modest 2.4% compared to June 2007, though that's still well above the Fed's long-term goal of 1.5% to 2%. Over the past three months, core inflation rose at a 2.5% annual rate.


Here's a chart of CPI



As mentioned below, agricultural prices are coming down. We don't know if that is a permanent or temporary situation. The long-term chart can be read as both a consolidation and a retreat so we'll have to wait until prices give us a confirmation. I'll cover oil prices tomorrow, but they are still in a rally.

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