An economist at the Bureau of Labor Statistics, where the Producer Price Index and the Consumer Price Index are compiled, emails:
Hello Bob,
I hope you find this as interesting and funny as I did. While I was getting ready to pay for my breakfast at the cafeteria inside the Bureau of Labor Statistics, I came across this sign that said that prices are going to go up starting May 19th due to a "rise in commodity prices".
The irony of the whole thing is that the display sign is at the building where price inflation data for producer price and consumer price indexes is assembled and reported. Needless to say, your analysis in the EPJ Daily Alert is correct when it comes to accelerating price inflation likely showing up in the CPI soon. If even a cafeteria sign can tell you that, you wonder why people at the Fed are concerned with "deflation," when it's the opposite trend that is taking place, especially in food products.
Last night, for example, I walked into Staples to buy copy paper and printer ink. I kid you not, prices are up 50%-100% from year-end so much so, and I actually questioned the staff what was going on. I’m not sure their answer was 100% complete, but in stating that high gasoline prices are yielding surging freight costs, I think you get the picture. And trust me; this is not an “isolated incident.” Yesterday, Dean Foods blamed exploding milk costs for its falling sales earnings and stock price; and as we noted last week, the nation’s second largest supermarket chain – Safeway – made the following ominous statement, after announcing significant first quarter losses.
ReplyDeleteWhile sales met plan in the first quarter, income was slightly below plan, in part as a result of inflation in produce, meat and pharmacy that was not fully passed along for competitive reasons.
-Business Week, April 23, 2014
Regarding food inflation – or as we deem it, the “Most Important Reason to Own Precious Metals” – recall the chart of the U.S. Foodstuffs Index we presented in “Californ-inflation” – which had risen a whopping 19% through the year’s first three months care of money printing, historic California and Brazilian droughts and a host of other factors. Well guess what? The droughts are worse than ever, the money printing at unprecedented levels, and the outlook for both unchanged. And thus, it shouldn’t surprise you that said index is now up more than 22% for the year which is probably why, for the first time, my wife is starting to notice the food price surge highlighted last week by the CEO of Landry’s, one of the world’s largest restaurant chains. But don’t worry; all’s well, as all problems can be blamed on “the weather.”
http://blog.milesfranklin.com/hells-bells