After last week’s inflation snafu, the WSJ makes up for it this week — and then some. Just in time for today’s 8:30 PPI report, the Journal’s pages are chock full of all sorts of inflation goodies:
• For Many, Inflation Is the Worry: Life keeps getting worse for the consumer, with few
signs it’s going to get better soon. That means the economy’s woes
could drag on far longer than many thought. A growing worry is inflation. Economic slowdowns and
weak consumer spending normally curb price pressures, but that isn’t
happening this time around, at least so far.
• Food Inflation, Riots Spark Worries for World Leaders: Surging commodity prices have pushed up global food prices 83% in the
past three years, according to the World Bank — putting huge stress on
some of the world’s poorest nations. Even as the ministers met, Haiti’s
Prime Minister Jacques Edouard Alexis was resigning after a week in
which that tiny country’s capital was racked by rioting over higher
prices for staples like rice and beans.
• Higher Food Prices May Be Here to Stay: For all the economists and consumers who hope high
food prices are temporary, here’s one reason why they probably won’t
be: Farm costs are skyrocketing, making permanently higher prices
essential for farmers to keep expanding production.
Those articles — all from Monday’s paper — are followed today by a Martin Feldstein OpEd, Enough With the Interest Rate Cuts. Feldstein argues that "It’s time for the Federal Reserve to stop reducing the
federal funds rate, because the likely benefit is small compared to the
There seems to be a growing recognition amongst the cognesceti that several of the usual plays out of the manual are not working. Consider each of the following factors (in decreasing order of dissemination), and the impact they have on the economy, the Federal Reserve, and the current US election cycle:
• Slowing economic growth is failing to slow price increases;
• There is a widespread recognition that CPI as assembled by BLS fails to adequately capture inflation pressure;
• Inflation expectations have increased, despite all of the reassurances from the usual
• The Boskin commissions dishonest backdoor attempt to cut Social Security is receiving increasing scrutiny for its role in understating inflation. (See Fleckenstein: Greenspan’s Bubbles)
There is a slow but steady realization coming to the fore that there is no such thing as a free lunch, and the sooner the leaders of this nation figure that out, the better off we will all be . . .
Google Trends: Inflation, 12 months, (Worldwide)
BTW, if you wish to incontrovertibly demonstrate your lack of mental acuity, place a comment stating that price increases and/or inflation is a lagging indicator. Use the name "half wit."
UPDATE: April 15, 2008 9:14am
Prices paid to U.S. producers rose almost twice as much as forecast in March, reflecting higher fuel and food costs that threaten a pickup in inflation. The 1.1 percent gain followed a 0.3 percent increase in the prior month, the Labor Department said today in Washington. So- called core producer prices that exclude fuel and food increased 0.2 percent, as forecast.
Rising raw-material costs are hurting profits as slowing demand makes it difficult for companies to pass increases on to consumers. The need to avert a deeper economic slump will prompt Federal Reserve policy makers to lower the benchmark interest rate again this month even as inflation accelerates.
WSJ: "Inflation is back"
For Many, Inflation Is the Worry
WSJ, April 14, 2008; Page C1
Food Inflation, Riots Spark Worries for World Leaders
IMF, World Bank Push for Solutions;
BOB DAVIS and DOUGLAS BELKIN
WSJ, April 14, 2008; Page A1
Higher Food Prices May Be Here to Stay
WSJ, April 14, 2008; Page A2
Enough With the Interest Rate Cuts
WSJ, April 15, 2008