Inflation Liftoff

Inflation Rate LiftoffGreg Hunter’s USAWatchdog.com  (updated)

The government released a nasty little inflation rate surprise yesterday.  Prices increased .4% in January, which was 33.3% higher than the expected .3% increase.  It should come as no surprise to anyone who fills up at a gas station or shops in a grocery store that prices are on a tear.

The Bureau of Labor Statistics (BLS) report said, “Increases in indexes for energy commodities and for food accounted for over two thirds of the all items increase. The indexes for gasoline and fuel oil both increased in January, continuing their recent strong upward trend. The index for food at home posted its largest increase in over two years with all six major grocery store food group indexes rising.”  (Click here for the complete report from BLS.) 

According to the latest report from economist John Williams at Shadowstats.com, consumer prices in January rose to 9.1% annually if inflation was computed the way BLS did it in 1980. ( Shadowstats.com methodology strips all accounting gimmicks out of the equation.)  Consumer prices (CPI) are not the only thing rising.  According to Shadowstats.com, producer prices (PPI) are also staging steep increases.  Williams says, “The monthly PPI finished goods increase reflected the Fed’s dollar-debasement-induced upside pressures on gasoline prices, although subdued reporting of food inflation continued to run counter to anecdotal evidence of Fed-induced spikes there.  The 0.5% “core” PPI inflation rate for January (up from an unrevised 0.2% in December) also was an upside surprise for the markets, as the effects of higher oil prices spread into broader areas of economic activity.”

To offset the bad news on inflation, retail sales gains reported this week seem to show consumers are still keeping the economy going.  Here’s the way it was reported at Marketwatch.com, “Sales at U.S. retail stores rose in January for the seventh straight month, but the increase was the lowest since last summer, government data showed Tuesday. . . .Retailers’ sales rose 0.3% last month as consumers spent more on gasoline, autos and online goods, the Commerce Department reported. It was the smallest increase since last July, however.” As I have been warning, this is the government’s distorted way of reporting inflation as growth.  In reality, there was no increase in sales at all last month.  Inflation in prices of .4% more than cancels out .3% sales growth.  This is clearly a setback for the economy and not a step forward.  (Click here for the complete Marketwatch.com story.)

It’s apparent the mainstream media (MSM) tends to paint a much rosier picture than reality.  And, if the MSM doesn’t like a topic, even if it is tremendously newsworthy, then it simply ignores it.   How else could a story not get coverage, where everything sold in America went up in price by nearly 2% since Christmas!  Do you think this information came from some crazy website in the blogosphere?  No way!  It came from the “Billion Prices Project” (BPP) at MIT Sloan School of Management, and it is totally legitimate science.   According to the MIT website, “our data are collected every day from online retailers using a software that scans the underlying code in public webpages and stores the relevant price information in a database. The resulting dataset contains daily prices on the full array of products sold by these retailers. . . . It is updated on a daily basis and leveraged to estimate annual and monthly inflation.   This index is not designed to forecast official inflation announcements, but to provide real-time information on major inflation trends.” (Click here to see the BPP interactive chart at MIT.  It’s pretty cool.)

Phil Davis from Philstockworld.com wrote his own story about the parabolic short term spike in prices that the BPP revealed.  Davis said in a post this week, “Yet the Chairman of the Federal Reserve Bank of the United States of America tells us over and over and over again that it is not happening.  He tells us that inflation was down in 2010 from 2.4% in 2009 to 1.2% last year and that he sees no inflation.  In fact, he is basing his mathematical models on it and directing our nation’s policies on this basis and he is conducting the most dangerous monetary experiment in the history of the Universe – ALL BASED ON HIS PREMISE THAT INFLATION DOES NOT EXIST!   (Click here for the complete Philstockworld.com post.  It is excellent.)

We all know here in the real world that inflation is alive and well.  The sad thing is until the Fed stops its money printing, prices of just about everything we consume will increase.  Inflation is guaranteed to hurt the people worst who can afford it the least.

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Comments
  1. Jan

    I am a retailer and what we are seeing is manufacturer’s and distributors loathe to increase product prices are gouging on shipping charges. Shipping was once the flat UPS or Fed Ex rate, today it is a percentage of the invoice total, as high as four or five percent of the total invoice. We once considered shipping charges as a cost of doing business, but now must factor them into the retail price, we cannot afford to absorb the shipping cost anymore. We cannot pass the entire shipping charge on at the retail level either. They take a big bite out of the bottom line.

    • Greg

      Thank you Jan, good to know!!
      Greg

      • sky

        patriotactionnetwork artical Get ready SEIU’S purple army nation wide protest schedule teachers unions pressure members to show solidarity.

        • Greg

          Sky,
          Good to know. Thank you. The unions will not win friends with this stunt. All they have to say is raise taxes or issue more debt so they don’t have to deal with reality. The reality is the nation and most of the states are broke and many border on insolvency.
          Greg

          • Albert

            Greg:

            You can evade reality, but you cannot evade the consequences of evading reality.
            Ayn Rand.

            • Greg

              Albert,
              Good quote!!!! Thank you.
              greg

  2. Sam

    Dear Greg,

    Zowie! You sir, are not a poet, for such a word fails to describe the prose of this column. Rather, it was ballet! Bravo!

    Whom are we to believe anymore? Fox News did not report the inflation we had after the end of the last recession. This “recession” (really, depression), still winds and squeezes like a boa constrictor, yet only a few online dare report it (although Fox did a lame job of it on Wednesday). Clearly, there is not a line, but a wide divide, between the people of this country, and the government/msm alliance. It seems that the latter seem to live in what Field Marshal von Rundstedt described the world Der Fuhrer lived in: a “wolkenkuckucksheim” (cloud cuckoo land).

    Thank you Greg, for being there. Yours and a few other places are refreshingly honest. And, please continue to be “hard-hitting.” Please don’t ever be a “sell-out,” many of us need your open windows.

    • Greg

      Yes Sam, we do live in “cloud cuckoo land.”I am afraid it will get much crazier in the not so distant future. Thank you for the kind words.
      Greg

  3. Richard

    Hmm.. I’m starting to see a problem. Even those whose attempt to be critical of the way the US Government does it’s math can’t get elementary school math right. .4% is 33% greater than .3%, not 25%. A 25% increase over .3% is .375%. Those who live in glass houses shouldn’t throw stones.

    • Greg

      Yes Richard, you have exposed me for not being perfect. I was trying so hard to hide that fact. This isn’t about glass houses or throwing stones. It is about the public being lied to repeatedly by the government. I didn’t lie my friend. I made an honest mistake in my attempt to inform the public on a free site. By the way, I fixed the mistake before I read your comment. Thank you for your input.
      Greg

      • sandy

        Great article Greg. I always enjoy reading your work!

        • Greg

          Thank you Sandy.
          Greg

    • George

      Richard,
      Do you think that the Government is 100% accurate? I see a lot of BS math on their side and a lot of “restatements.” This is a common math error. I’ve seen CPAs make this same mistake. Greg, I know you strive to 100% accurate and you do a very good job accuracy wise; much better than the government numbers. Maybe Richard should review the government number with as critical eye as he does your site. I have to wonder if Richard has a body of work I can review for accuracy. It’s easy to be right all the time when you don’t do anything 😉
      Richard,
      Can you point me to some of your work so I can fact check for perfection or are you one of those blog gnomes that expect 100% accuracy when it exists only in theory and never in reality?
      And is the quote, “Man who lives in glass house should dress in basement”?

      • Greg

        George,
        Thank you.
        Greg

      • Richard

        The truth is I am extremely critical of the way our givernment does it’s math. But, a mistake is a mistake. You corrected it. Move on.

  4. Art Barnes

    Inflation won’t stop, its too late to stop it. The Fed has no tools left to keep the economy afloat except “perpertual QE”. The U.S. created 1&1/2 million jobs overseas last year, and less that that in this country. The million jobs created here were not enought to keep up with population growth, school graduates, and the discharged arm forces, etc. – and, keep in mind, the jobs created here were lower wages than a decade ago. The permanent job is also vanishing in America. Temporary jobs are not subject to Obamacare, etc. Another term I heard the other day was the “permanent temporary” job; another mockery of the so-called recovery the government claims is under way.

    The American government and its crooked politicians with MSM’s backing, the Fed, and the Wall Street boys simply cannot be shamed.
    But don’t worry america, the Republicrats will fix it with 100 billion in cuts – wow, 0.2 percent cut in the deficit – a token play to claim they are doing something. Don’t let yourself be fooled, for years now both parties have been up to their eyeballs in the destruction of our great country while lining their pockets with our hard work. Both parties are rendering themselves irrelevant. With only a few exceptions, they are just figurheads now to support the Fed and its policies of dollar debasement which leads us down that lonely road to third world status. Remember, in third world countries they have the super rich, abeit a very small class – that’s were our figurheads are hoping to land.

    Greg, Do you want the first t-shirt “permanent temporary”?

  5. markm