Wednesday, May 05, 2010

It Begins: Food Inflation

Well, you say that the price of your house decreased?

Not to worry. Feeding your family will make up for that decrease, but good.

The Bureau of Labor Statistics (BLS) today released their Producer Price Index (PPI) report for March 2010 and the latest numbers are shocking. Food prices for the month rose by 2.4%, its sixth consecutive monthly increase and the largest jump in over 26 years. NIA believes that a major breakout in food inflation could be imminent...

Some of the startling food price increases on a year-over-year basis include, fresh and dry vegetables up 56.1%, fresh fruits and melons up 28.8%, eggs for fresh use up 33.6%, pork up 19.1%, beef and veal up 10.7% and dairy products up 9.7%. On October 30th, 2009, NIA predicted that inflation would appear next in food and agriculture, but we never anticipated that it would spiral so far out of control this quickly --PR Newswire

Feeding corn to cars and shutting down petroleum-sources in the Gulf will make that a lot better, no?

Uh, no.

HT: Creative Minority

7 comments:

J. Strupp said...

?????


BLS doesn't release PPI until May 18th.

And this data doesn't sound correct at all.

And who the heck is the "National Inflation Association"? This sure sounds like a hack organization Dadster. Maybe not. Never heard of them.

I think you better do some more research here before you quote this data as gospel. Actually, if you go to the BLS, the data produced by "NIA" is incorrect.

J. Strupp said...

Ah they're "gold" people.

So basically the NIA folks are the people with gold bullion buried in their backyard in preparation for the day that fiat currency becomes worthless.

Got 'er now.

Dad29 said...

First off, the release is dated 4/22 and utilizes MARCH PPI data.

Having said that, I looked at PPI data for 'groceries' and cannot find corroboration, either.

BUT--FWIW, I don't shop; the spouse does. And she's telling me that prices are, indeed, popping, particularly for fruits/veggies, in the last 30 days.

And she means "popping"--i.e., more than just 1 or 2 percent.

So the "release" is wacky, but there are some signals which are not good.

J. Strupp said...

I guess the biggest problem I have here is that these folks are talking about grocery prices paid by the consumer.

PPI is not a measurement of prices paid by the end user. It's a wholesale index. It's very possible that PPI could be going up month over month while CPI remains flat. IOW, retailers are unable to pass along rising costs due to lack of demand. This is happening all over the place and in many sectors of the economy. Also, PPI is not a very good indicator of inflation anyway.

P.S. many of the items you list have plummeted in price over the last couple years (check out the price on a gallon of milk today vs. 3 years ago). Prices may be up in the short run, but they're not exploding upward if you look at long run trends. No matter, core CPI is flat and as been for some time now so anecdotal evidence isn't going to tell the real tale.

P.P.S. and off topic. I'm waiting for your weekly 10-year treasury yield update Dadster! We have to be at 4% now right? Maybe 5%?

Dad29 said...

The 10-year is at 3.49, with longer-than-10 yields around 5.2

J. Strupp said...

;)

J. Strupp said...

Just messing with you Dadster. Recent 10 year strength is no doubt a result of the pending nightmare unfolding in Europe.

http://www.ritholtz.com/blog/2010/05/to-print-or-not-to-print-the-question-for-the-ecb/


I think I'm going to re-start construction on my bomb shelter in the backyard. That, and pull everything the hell out of the market for a few months.