The Federal Reserve is now in day 1 of their two day meeting. The statement we get tomorrow, and the minutes we will read next month are likely to be intriguing.
Examples abound: The Times of London: Food-price inflation has already pushed up a typical family’s weekly shopping bill by 15 per cent in a year (Era of cheap food ends as prices surge). Yet here in the US, the BLS has food prices up only 4.5% year over year (that’s with the dollar down ~2% vs. the pound)
The price of rice has increased dramatically in recent weeks due to crop failure overseas and resulting hoarding… Rice has doubled in price in six months. (Bay Area Shoppers Asked To Limit Rice Purchases)
During the first week of April…leisure fares from traditional carriers on 280 major routes rose 13
percent from the previous year…We’ve got an industry that’s in trouble," said Vaughn Cordle, chief
executive and chief analyst at AirlineForecasts in Washington. "If oil prices stay anywhere near $100,
$120 for the year … we’ll have a massive restructuring of the airline industry." (Summer travel headaches loom as airlines’ woes deepen).
All these obvious price increases are begining to undermine confidence int he Federal Reserve. We see article like this one in the San Diego Union-Tribune: The Fed’s inflation gauge isn’t realistic, critics say and this one in Harpers: "Numbers Racket: Why the Economy is Worse than We know."
Is the Fed Causing a Global Food Crisis? http://bigpicture.typepad.com/comments/2008/04/is-the-fed-caus.html
Era of cheap food ends as prices surge
Steve Hawkes, Greg Hurst and Valerie Elliott
Times Online, April 23, 2008
Moms’ new battle: The food price bulge
Parija B. Kavilanz,
CNNMoney.com, April 21, 2008: 10:33 AM EDT
The Fed’s inflation gauge isn’t realistic, critics say
San Diego UNION-TRIBUNE, April 17, 2008 http://www.signonsandiego.com/news/business/20080417-9999-1n17inflate.html