Friday, January 27, 2012

Food Inflation

Here is the BLS (possible just BS) Consumer Price Index Summary.  Now everyone is supposed to look at the "seasonal adjustments", but I suggest looking at the unadjusted 12 months because, obviously, December falls in roughly the same season every year -- you know, so far.

Thus, it makes sense to me that if your at-home food costs are 4.7 percent higher this past December than they were in December 2010, you have experienced nearly a five percent rise in the cost of eating a hamburger off your grill. 

Also noteworthy is the fact that gasoline was just about 10 percent (9.9) higher in December 2011 than in December 2010.

This is not a sign of hyperinflation.  This is a sign of decreasing margins and increasing wholesale and material costs to producers.  Wages are not going up, but used car prices rose more than new car prices.  I wonder why that is?  And fuel oil, if you happen to need to heat your house with that, better invest in cheap Chinese Carteresque sweaters -- 18%.  Ouch. 

But when the FOMC met this week their statement was that prices are "stable".  And I'll admit, you can find a lot of horse $h!t in a stable.  So there's that.  Yes, if you don't count anything you actually need to buy, and you are willing to let the maroons at Labor Statistics run your numbers through their magic calculating engine then everything is beautiful.

The euro is back up against the dollar because both Bernanke and the ECB are committed to funding government debt right up until the very bitter end.  Something could happen.  We could get hit by a comet.  We could be invaded by space aliens (Newt's moon base wouldn't sound so crazy then, would it?).  Somebody could get cold fusion to work.  We could figure out a way to put one-atom thick graphene vacuum tanks in airplanes so they would have more lift and use less fuel.  An huge solar flare could wipe out all the electronic records and reset all the government debts to zero. 

Barring one of those events or the election of Ron Paul as president and a Libertarian sweep of the House, the probability of which is slightly lower than the alien invasion, we are in for a long, strange and possibly harrowing trip.


  1. Very interesting. My favorite $4 sammich just went up to $5.25 within the last month (it has Bacon in it, up 20% I hear).

    I'm not going to mention that yellow-ish metal. Nope. Gonna keep my mouth shut this time.

    Thought you might like this explanation of the financial meltdown. Even I could understand it.

    Explaining Modern Finance and Economics Using Booze and Broke Alcoholics

  2. That's perfect. The thirty year bender.