Sunday, June 22, 2014

WSJ Spots the Developing Price Inflation

By Robert Wenzel

It's coming, be prepared.

WSJ notes:
A burst of higher inflation is fueling debate about whether the Federal Reserve should move sooner to reduce its support for the U.S. economy than currently anticipated.

Consumer prices rose 0.4% in May from a month earlier, the most in more than a year, the Labor Department said. That reflected higher household costs for everything from groceries and gasoline to rent and medical care. Core prices, which strip out volatile food and energy costs, climbed 0.3%, the most since August 2011.

Tuesday's report showed the overall consumer-price index up 2.1% from a year earlier.

The Fed targets annual inflation of 2%, a pace it views as healthy for price stability and economic growth. But the central bank prefers a separate measure—the Commerce Department's price index for personal consumption expenditures—that has shown less-dramatic price increases and inflation still running below its target, at 1.6% in April.

Still, both measures suggest inflation picked up in the spring after two years of sluggishness.
Write this down:

With an inflationist as Fed chair, Janet Yellen, and an inflationist as Fed vice-chair, Stanley Fischer, the Fed is going to be very slow in attempting to battle price inflation. There real target, before they start getting concerned is, I suspect 3%. Once the numbers show price inflation at 3%, they will start to react, but it will be too little too late. The trip from 3% price inflation to 5% price inflation is going to be very fast.

Robert Wenzel is Editor & Publisher of and author of The Fed Flunks: My Speech at the New York Federal Reserve Bank.


  1. The masking of 'real' inflation (that which disproportionally affects the commoner) has been going on relentlessly but in a deviously masked manner for several years at a rate outside what would be 'normal' even in a centrally planned economy such as ours.
    Besides the obvious (fuel), food cost in particular have been the realm of greatest deceit.
    The price of eating, and I'm speaking of actually consuming that which has legitimate nutritional value, has skyrocketed and now represents an essentially UNAFFORDABLE cost to most American prisoners.