The producer price index and consumer price index both came out this week. We all know the BLS manipulates the shit out of the CPI to make it appear much lower than it really is. But, they can’t do that with the PPI. This is what companies pay for the raw materials that go into everything you use, buy or eat.
Here are the facts:
- Producer prices have increased by 7.2% in the last year.
- Producer prices have increased by an annual rate of 8.2% in 2011.
- Food prices have increased by 7.7% in the last year.
- Energy prices have increased by 17.9% in the last year.
Here is the link if you’d like to verify these figures for yourself:
http://www.bls.gov/news.release/pdf/ppi.pdf
The shills on CNBC need to explain how corporate profits are going to go up if the companies are eating these cost increases rather than passing them along to consumers. If they are passing them along to consumers than we have 7% inflation and interest rates need to be raised. Which is it Kudlow and Cramer?
The consumer price index, even with the BLS bullshit adjustments, is showing inflation. Here are the government reported figures:
- The CPI has risen by 3.6% in the last year.
- The CPI is rising at an annual rate of 4% in the last three months.
- The CPI is rising at an annual rate of 5.3% so far in 2011.
- The annual price increases for food are as follows:
- Meat up 7.4%
- Dairy up 7.9%
- Fruits and vegitables up 6%
- Fats and oils up 10.4%
- The annual price increases for other things you might use are:
- Fuel oil up 29%
- Gasoline up 33.6%
- Transportation up 12%
- Water, sewer and trash up 5.1%
But you’ll be happy to know that living in your house only went up 1.5% and since that makes up 43% of the CPI calculation, then inflation is under control. Do you buy and sell your house on a daily basis? It is meaningless in the day to day calculation of inflation. If you remove the housing calculation from the CPI than your real costs rose by 5.2% in the last year, versus the 3.6% reported by the BLS. Here is a link to verify my calculations.
http://www.bls.gov/cpi/cpid1107.pdf
The CPI is a bastardized number that under estimates the true rate of consumer inflation by at least 7%. Again, John Williams at www.shadowstats.com presents the true figure of 12%.
So we can clearly see that prices are rising by between 5% and 12%, even in the government manipulated statistics. But, still Ben Bernanke goes in front of Congress and the American people and lies. He says that inflation is transitory. He says it is moderating. He actually warns about deflation. The man is a filthy liar. Inflation is accelerating. He is trapped like a rat. He needs deflation so he can institute QE3 and save his beloved banks. Reality is not cooperating, but it won’t keep him from making up his own reality.
With inflation roaring, Ben is now resorting to trying to crash the markets and instill fear into the populace. He will stop at nothing in his quest to destroy the middle class and enrich his banker masters.
Hope@ZeroKelvin says:
I am surprised about the beef prices. At least here in The Great Sahara Desert that is Texas these days, whole herds are going to the slaughterhouse as there is no hay to be had for love or money and the pastures look like a flamethrower passed over them. More beef should be lower prices, at least in a SANE economy.
Are you guys really surprised by these numbers? What else is gonna happen when you increase the total money supply by the mindless money printing AND the producers are not producing.
More money for less stuff = inflation.
It is only gonna get worse. If you have not been stocking up over the last two years on everything your family is gonna need for the next 3-5 years, you might be in trouble. People called me a total loon for doing this since 11/08 but I am glad I did. We call my little storage buildings the “Mommy Mart”, heh.
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19th August 2011 at 1:23 pm
ResFam says:
“The shills on CNBC need to explain how corporate profits are going to go up if the companies are eating these cost increases rather than passing them along to consumers.”
You’re right of course if you’re just considering domestic profits… But aren’t many of these corporations now global and making record profits overseas thanks to our weak dollar? The big guys are selling 50% or more overseas, so those transactions in foreign currencies are coming back as more dollars as the dollar weakens.
Payrolls have also been slashed, so labor is at an all-time low on the cost side.
I think the bottom line is that corporate profits may LOOK good, but look behind the numbers and it’s a real shit show. CNBS wouldn’t be capable of making that analysis though.
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19th August 2011 at 1:26 pm
Administrator says:
THIS SURE SOUNDS TRANSITORY
Retailers Raise Prices to Offset U.S. Labor Costs
Retailers and restaurants are raising consumer prices to help compensate for higher labor costs, which increased the most in almost three years during the second quarter.
Fifty-three percent of these companies with annual sales of $10 million to $500 million have lifted prices during the last 12 months, up from 32 percent a year ago, according to a quarterly survey by Barlow Research Associates. This comes as U.S. inflation excluding food and energy costs accelerated at an annual pace of 1.8 percent in July, the biggest such gain in more than a year, according to Labor Department data released yesterday.
Unit labor costs for nonfarm businesses rose 1.3 percent in the quarter ended June 30 compared with a year ago, as hourly compensation rose while productivity fell, Bureau of Labor Statistics data show.
“This is an early sign that even with high unemployment, labor costs are starting to pick up, giving companies an incentive to raise prices,” said Peter Newland, an economist at Barclays Capital Inc. in New York. Labor costs are the biggest component of business expenses, he said.
Sixty-one percent of the 149 public and private retailers and restaurants in the Barlow survey said they plan more price increases during the next 12 months. This indicates a “significant change” in attitude from the previous year, when 41 percent had such plans, according to John Barlow, president and founder of the Minneapolis-based business.
“Middle-market companies have been aggressive in increasing prices because they’re trying to protect profit margins,” he said.
Highest Level
The average hourly earnings of all U.S. private-sector employees rose 2.3 percent in July from a year ago, the highest level since October 2009, according to the Bureau of Labor Statistics. While the unemployment rate fell to 9.1 percent in July from 9.2 percent in June, it has remained above 9 percent for 25 of the past 27 months.
Christopher & Banks Corp. (CBK) raised prices by about 20 percent in May and June, while Casual Male Retail Group Inc. (CMRG) bumped prices up 5 percent in the first quarter and made more changes in the second, according to the companies. Meanwhile, diners at BJ’s Restaurants Inc. (BJRI) and Famous Dave’s of America Inc. (DAVE) will pay about 2 percent more for some menu items, the companies said.
Federal Reserve policy makers have acknowledged the recent acceleration in consumer prices. The Federal Open Market Committee has lifted its forecast for core personal consumption expenditure inflation, the Fed’s preferred measure, to about 1.7 percent from about 1.2 percent in January. The annual rate in June was 1.3 percent.
‘Seen Acceptance’
Even with higher costs for labor and commodities, Plymouth, Minnesota-based Christopher & Banks has “seen acceptance” of its higher-priced women’s apparel, President and Chief Executive Officer Larry Barenbaum said on a June 30 conference call.
BJ’s Restaurants intentionally kept most of its pricing power “in reserve” during the past few years before introducing increases of 2 percent in June 2010, Gerald Deitchle, chairman, president and chief executive officer, said on a July 21 conference call. The Huntington Beach, California- based chain is boosting prices by 2 percent for the period ending Sept. 27 and may make further changes in the fall.
“We do have the ability” to raise prices and have them “accepted by our guests,” Deitchle said.
Smaller retailers and restaurants, with annual sales between $100,000 and $10 million, also are lifting prices, though their plans are less aggressive than their middle-market peers, Barlow said.
Pricing Plans
Thirty-nine percent of the 243 smaller companies in the survey have boosted prices in the past four quarters, while 44 percent plan to do so in the next 12 months, according to Barlow data. This compares with 40 percent and 36 percent, respectively, a year ago. Barlow conducted its surveys in July for the quarter ending Sept. 30.
Small companies tend to be “price followers,” particularly if their goods or services aren’t very differentiated, according to Lawrence Creatura, a Rochester, New York-based portfolio manager at Federated Investors Inc.
“Small firms tend to observe market prices before changing them, and there is somewhat of a lag effect,” said Creatura, who manages the Federated Clover Small Value Fund. “It doesn’t mean they won’t increase prices, they will just do it later.”
Cache Inc. (CACH) “selectively” raised prices on women’s apparel styles that are unique to the New York-based company and set it apart from its competition, Chief Executive Officer Thomas Reinckens said on a July 28 conference call. The company is planning “slightly higher” increases in the second half of the year, he said.
No ‘Material Push-Backs’
The changes so far “have not met with material push-backs from our customers,” Reinckens said.
That may not be the case at Kirkland’s Inc. (KIRK), which sells home accessories and gifts. The Nashville, Tennessee-based retailer plans to raise prices in the next year, though it must balance these changes with a “reluctant customer,” President and Chief Executive Officer Robert Alderson said on a May 20 conference call. “I think we’re trying to be very selective, if we do have price increases,” he said.
Other companies also may face resistance from consumers who are weary from continued high unemployment, Newland said. Personal consumption adjusted for inflation slowed to an annual rate of 1.8 percent in June, down from 3.2 percent in November 2010, according to data from the Bureau of Economic Analysis.
Falling Confidence
Meanwhile, consumer confidence fell in August to the lowest level since March 2009, during the 18-month recession, which could further hamper spending. The Bloomberg Consumer Comfort Index’s monthly expectations gauge dropped to minus 34 from minus 22 in July.
The success of price increases also depends on circumstances that may be out of the companies’ control, including discounting by competitors, Barlow said.
Even so, retailers and restaurants are beginning to turn the corner in addressing the cost pressures of the past few years, according to Newland.
“We’re now in an environment in which firms are able to push up prices even though the growth environment remains moderate at best,” he said.
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19th August 2011 at 1:36 pm
Welshman says:
Got my 55 Cases (330 / #10 cans) of Thrive Food put away yesterday in my WelshMart bunker room. Yes Dr. Hope, you are crazy as a Loon, welcome to the asylum.
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19th August 2011 at 3:00 pm