Posts
![[Most Recent Quotes from www.kitco.com]](http://kitconet.com/charts/metals/gold/t24_au_en_usoz_2.gif)
![[Most Recent Quotes from www.kitco.com]](http://kitconet.com/charts/metals/silver/t24_ag_en_usoz_2.gif)
![[Most Recent USD from www.kitco.com]](http://www.weblinks247.com/indexes/idx24_usd_en_2.gif)
Non-core inflation surges
Wednesday, February 20, 2008
If, after hearing about "core inflation" of just two percent in recent years, you've wondered how price increases for food and energy look by comparison, here's your answer.
The Bureau of Labor Statistics does not provide a "food and energy only" index (they really should), so to get "non-core CPI" above you have to combine the 13.8 percent weighting for food to the two energy components - the 4.2 percent weighting for household energy and the 5.5 percent contribution for motor fuel.
This accounts for a total of 23.5 percent of the overall CPI and much, much more for some individuals such as seniors and working families.
After peaking at 17.2 in the aftermath of Hurricane Katrina in 2005 and a respite during late-2006 and early-2007, "non-core inflation" is now back firmly in the double-digit range, rising from 10.6 in December to 11.9 percent in January after a reaching 12.5 percent in November.
4 comments:
It's great that food and energy and considered "non-core", because who guys that stuff??
Inflation is severely understated to 1) reduce gvt benefits tied to inflation and 2)to overstate GDP.
Just wait till we have a 1% FFR (early 09). The Food and energy component will be off the chart!
Thanks for another great chart!
Those who identified resurgent inflation last year (and I was one) surely were on target. At this point, though, continuing to focus on the inflation rate as crucial is misdirected imho.
Suppose oil remains at $100 a barrel this year? Good or bad? In terms of the inflation rate, good: energy inflation would be 0%. In terms of the economy, though, it would surely be very bad. Consumers simply can't continue to pay $3+ gas without major negative impact on the economy -- even if that price does not go up any more.
In other words, at this point, it is no longer the inflation rate, but rather the simple cost of consumer necessities that is the crucial issue.
On that score, if anybody knows how where a table or graph of consumer expenses for necessities as a share of income can be located (or a source of data for such a graph or table), I'd be most grateful.
Combine that with the "lost purchasing power" as a result of the declining wealth effect (due to housing and, uh, stocks) and you have a real recipe for a consumer retrenchment (now underway).
It's a good thing that higher prices make a lot of the economic stats look good when they would otherwise be abysmal (retail sales, gdp).
Post a Comment