Friday, April 15, 2011

Atlanta Fed: 'Flexibile Prices' Skyrocketing

The Atlanta Fed puts together data for two indexes that should be paid close attention to, the Sticky Price Index and the Flexible CPI.

The Sticky Price Index tracks prices that change slowly. In March, the index rose at a 1.5% annual rate.

But the Flexible CPI Index, i.e. the index of prices that move quickest is going through the roof.  For March, this index rose, on an annualized basis by 21.1%. In February, it rose on annualized basis at 17.5%.

As recently as June 2010, the rate over the previous 12 months was 1.77%. The 12-month rate ending in March is at 6.43%.

Bottom line: There is a tremendous acceleration in price inflation based on prices that are most flexible. The only thing appearing to hold inflation back on more traditional indexes are prices that are slow moving. Given the amount of money that has been pumped into the system, especially since Q4 2010. It is not hard to understand the jump in flexible prices. Further, it is not difficult to reach the conclusion that, based on the money growth, the slower changing prices will most likely follow the lead of the flexible prices and that there is much price inflation just ahead.


  1. Thanks Atlanta Fed.
    That must be why Silver is over $43 ozt.

  2. I believe based on our shopping these past few years, that inflation has been about 5-10% each year. The last 6 months, the slope is on the up and up.

    Of course, anything related to oil is way up.

    Most of our tax assessments have been up 10% each year but our property value is down - go figure. Other dues are up. The foods that we buy a lot are way up - onions have gone sky high and staying high in price. Eggs up. Veggies up. Apples up. Milk still pretty cheap. We stopped eating junk cereal, but have noticed that things like oats have gone up 30-50% these past 6 months.

    It seems the government is always trying to find a clever way to tax you. And inflation is also a tax, and they try to hide that in the cleverst ways.

    The government lies.

  3. @ Charlie -

    it is not a tax; the govt does not receive any money. it is a price increase.

  4. @ Anon 11:35

    The government and the big businesses are the ones who receive freshly printed money. They can spend it before price increases set in while simultaneously causing the inflation by introducing more currency into circulation. This, in effect, is a way for them to take money from people without having to actually tax it away.

  5. I believe a singularity will be triggered when the Carl's Jr $6 Burger becomes $7.

  6. ^^^ Inflation is a tax, some countries are better known for it than others. Italy pre-EU in particular.