Inflation is back...!

[OlympicBrian]

Inflation is back...!
By Dan, Seattle
- Mainstream media neglecting to mention trend, while bonds sell off

According to today's (8:30 a.m. (EST) Friday, December 10, 2010) Bureau of Labor Statistics (BLS) data on imports, non fuel imports are up 3.0 percent over last year.

And, "Import prices advanced 1.3 percent in November following a 1.0 percent increase in October. The November rise was the largest monthly advance since a 1.5 percent increase in November 2009 and marked the first time since May and June 2009 that import prices rose by at least 1.0 percent in consecutive months. The price index for overall imports increased 3.7 percent over the past 12 months..."
http://www.bls.gov/news.release/ximpim.nr0.htm

Next, the most recent Fed beige book on December 1, 2010 is rife with inflation references, with many "hidden" beneath the headline summary (read the information for each district):
"...some manufacturers in the Boston, Cleveland, Atlanta Districts have announced plans to raise their product prices in the near future. Retailers in Philadelphia and San Francisco noted price increases on selected products imported from Asian countries."
http://www.federalreserve.gov/fomc/beigebook/2010/20101201/default.htm

Finally, recent ISM reports have been full of pipeline inflation for months; the prices index is the highest:
"Commodities Up in Price
Aluminum (3); Caustic Soda (4); Chemicals (2); Copper (4); Copper Based Products; Corn (3); Corrugated Containers (9); Nickel; Plastic Resins; Polyethylene (3); Resins; Soybean Oil; Stainless Steel; Steel* (3); Titanium; and Titanium Dioxide."
...
"None of the 18 manufacturing industries reported paying lower prices on average during November."
http://www.ism.ws/ismreport/mfgrob.cfm

Inflation is not good for the bond market, mortgage market, or ultimately the medium- and long- term for the stock market. It is unknown how long it will take for these numbers to show up in the "backwards looking" CPI or PPI--but you can be sure the "smart" people are getting rid of bonds funds now. I'd guess 1-2 months and we'll see bad headline CPI/PPI numbers.

Have you checked your 401k allocations recently?

[OlympicBrian]

1. kick

[OlympicBrian]

2. kick

[OlympicBrian]

3. China's Inflation Tops 5%, Adding Pressure for Wen to Raise Interest Rates

China’s inflation accelerated to the fastest pace in 28 months in November, underscoring the case for Premier Wen Jiabao to raise interest rates again.

Consumer prices rose 5.1 percent from a year earlier, driven by food costs, a statistics bureau report showed in Beijing today. That was more than the 4.7 percent median forecast in a Bloomberg News survey of 29 economists. In October, inflation was 4.4 percent.
...
Producer prices rose 6.1 percent in November from a year earlier, exceeding analysts’ median forecast of 5.1 percent, the statistics bureau report showed. Costs of raw-materials such as cement, steel, fuel and cotton have surged, a survey of purchasing managers indicated on Dec. 1.

http://www.bloomberg.com/news/2010-12-11/china-s-inflation-tops-5-adding-pressure-for-wen-to-raise-interest-rates.html

[BzaDem]

4. As Krugman continuously points out, a return of low-to-moderate inflation would be a GOOD thing.

It would indicate that consumer demand is picking back up.

Zero inflation is extremely dangerous, since it can lead to deflation (where everyone holds onto their money waiting for prices to go down, destroying the economy).

[backscatter712]

7. Some inflation is indeed a good thing.

Maybe if there was some money depreciation (OK, not double-digit inflation), maybe that'll get the rich fucks to end their capital strike - after all, if they do nothing but sit on their money, they'll lose it.

[OlympicBrian]

12. I can't recall a period of low growth/employment and inflation since the 1970s

It was called stagflation.

[nadinbrzezinski]

5. Actually a little at the macro level

is ok... let's hope this does not accelerate though

[OlympicBrian]

6. Reading the beige book

It sounds like come 2011 price hikes may become more common than we thank.

[upi402]

8. As the USD

nose-dives -because it's just Monopoly money now- it will soar (IMHO).

[nadinbrzezinski]

9. To a point it's been expected

part of waht they are doing at the fed.

I feel for people on fixed income ... like retired. If this stays at the reasonable (unlikely) it will prove stimulative

Too much... that IMHO would be 5% or above... it could spell trouble.

[trackfan]

10. We can only hope.

KILL THE DEBT!!!!!

See.

[OlympicBrian]

11. And: OPEC won’t raise its oil production rate

OPEC won’t raise its oil production rate
"Oil prices reached a two-year high last week as Wall Street analysts predicted $100 barrels for 2011. Future contracts settled at $87.79 on Friday."
http://www.marketwatch.com/story/opec-wont-raise-its-oil-production-rate-2010-12-11

[mmonk]

13. Commodity driven and may well not hold.

Low wages and high employment should hold it in check.