Inflation………Got Ya! But Uncle Sam Says Trust Us, There Is No Inflation….Hmm, Have They Earned Our Trust? Sort Of Like “There Is No Housing Bubble” or The “Suprime Problem Is Contained” Back In 2007, Didn’t Turn Out So Well, Did It!

Posted By on January 18, 2011

This morning, we see Britain’s consumer price index grew in December to an annualized 3.7%. Fuel prices are growing at their fastest pace since July, and food prices are rolling at a rate last seen in May 2009.

Like the U.S. Federal Reserve, the Bank of England has an inflation “sweet spot” of 2%. But Britain’s CPI has been above 3% for 13 months now. Unlike in the United States, even the “core” rate of inflation in the UK is rising at an alarming 2.9%.

Inflation Is Where?

The BLS CPI has shown virtually no movement over the last few years.  Much of this is due to the bursting of the housing market.  The BLS heavily weights housing.  Most Americans spend the most on their housing costs each month.  Yet the housing crash has hidden some major inflation in certain items.  For example, oil is back up and you need only look at gas prices.  For those who shop the cost of food items has gone up last year.  Yet retailers have gotten creative with packaging so prices stay the same yet the amount you are receiving has gone down.

Take a look at the price of coffee, wheat, soybeans, orange juice, and other items over the last year.  The S&P 500 went up by 13.6 percent but this pales in comparison to other sectors.

inflation commodities

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