Monday, April 7, 2014

FORBES: Is Inflation Next?

James Gruber at Forbes writes:
Inflation is dead. At least that’s the view of the vast majority of economists, investors, policymakers and financial commentators. The view has been given further currency in recent months via various speeches from IMF director, Christine Lagarde. She’s urged policymakers to fight deflation as it’s the major threat facing developed economies in 2014. The latest consumer price inflation (CPI) statistics, whether it be in the US, Europe or China, seem to support her view.

There are signs though that inflation shouldn’t be written off altogether. The price action of agricultural commodities and gold is suggesting as much. Oil hasn’t yet followed suit but should be closely watched.

And for the record, though it is not clear why, the MIT Billion Prices Index is registering price inflation at a much higher rate than U.S. government data. The latest number from the index is showing annualized price inflation of 5.68%

What should one do? Accumulate gold and silver, and read the EPJ Daily Alert, where price inflation data are monitored.

3 comments:

  1. Could you explain where exactly you see the number of 5.68%? The latest numbers show the online index at a bit higher than 2% annually. Monthly numbers are actually lower than the CPI and a LOT more volatile. The difference also seems pretty straightforward to explain since the MIT index only includes online goods prices. Thank you.

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  2. You are looking at the wrong data. The chart you are looking ends in February. And the monthly data is, well, the price increase for the month. You would need to multiply that by 12 to get the annualized rate. I cover all this in more detail in the EPJ Daily Alert, with more current data.

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  3. I'm waiting for our favorite troll, Jerry Wolfgang, to weigh in. He'll no doubt tell us that anyone who doesn't blindly trust government statistics is a tin foil hat wearing kook.

    After all, our representatives are selfless, honest, hard working servants of the people. They would never tell a lie. That's what Obama told me.

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