In July, even the inflation-deniers "core" price index for finished goods, which does not include foods and energy, let them down. The core index rose 0.4 percent, for an annualized rate of 4.8%.
But the index for finished consumer foods, which is not part of the core index, alone increased by 0.6 percent in July, an annualized gain of 7.2%, which matches the actual increase inthe overall producer price index gain over the last 12 months.
According to the BLS, a major contributor to the July food increase was beef and veal prices,
which moved up 2.7 percent for the month. Higher prices for fresh fruits and melons also played a significant role in the finished foods advance.
Bottom line, the food index is trending in line with the overall producer price index at 7.2%. At the start of the year, I forecast that double digit price inflation would hit somewhere in the second half of the year. The second half has just started and only a short-term dip in energy prices (down 0.6% in July) prevented that from coming very close to occurring in July, but we are very near. Money supply is currently growing very rapidly under Fed chief Ben Bernanke and the likelihood that we will hit double digit price inflation by the end of the year remains very strong.
Here are the 12-month changes in producer prices since the start of 2011:
Only Paul "Prepare for Deflation" Krugman would not be able to see the accelerating price inflation. Given the accelerating money growth this price inflation trend is going to do nothing but accelerate.