{"id":1119,"date":"2011-03-21T10:25:17","date_gmt":"2011-03-21T15:25:17","guid":{"rendered":"http:\/\/www.billlosey.com\/?p=1119"},"modified":"2011-03-21T10:25:17","modified_gmt":"2011-03-21T15:25:17","slug":"is-inflation-back","status":"publish","type":"post","link":"https:\/\/billlosey.com\/knowledge-center\/is-inflation-back\/","title":{"rendered":"Is Inflation Back?"},"content":{"rendered":"<p><strong>Prices are rising. <\/strong>In February, the  Consumer Price Index advanced 0.5%. That follows increases of 0.4% in  December and January. This doesn\u2019t exactly represent runaway inflation  \u2013to give you some perspective, the CPI rose by almost 1.1% per month  across 1979 \u2013 but it may be cause for concern.<\/p>\n<p><strong> <\/strong><\/p>\n<p>Producer  prices have also jumped. The government\u2019s Producer Price Index climbed  1.6% in February on the heels of a 0.8% increase in January and a 0.9%  boost in December.<\/p>\n<p><strong>Should core inflation reassure us?<\/strong> Some observers aren\u2019t worried. They urge us to look away from the  \u201cheadline\u201d inflation and focus on the core numbers that factor out  often-volatile food and energy costs. Core CPI was just 0.2% last month,  as was core PPI.<\/p>\n<p>Those are  nice low numbers, but other numbers within the indexes aren\u2019t very  comforting. Prices for finished consumer foods went up 3.9% in February &#8211;  the biggest monthly gain in that category since 1974. The CPI\u2019s index  of fresh vegetable prices rose 6.7% in February. Natural gas prices rose  7.6% last month. Overall prices of crude energy materials have  increased 17.8% since November. At the supermarket, you may have noticed  that a gallon of milk costs nearly as much as a gallon of gas.<\/p>\n<p><strong>Should the Fed make a move?<\/strong> The Federal Reserve last raised the federal funds rate on June 29,  2006. It hasn\u2019t adjusted it at all since December 16, 2008.The Fed has  downplayed the inflation threat, but it may not be able to continue  doing so.<\/p>\n<p>The question is  whether the recent spikes in energy and food prices are momentary and  stemming from geopolitical events or actually emblematic of a global  rise in inflation.<\/p>\n<p>Consumers  have inflationary expectations, as measured by consumer sentiment  surveys and other yardsticks. If rising food and energy prices lead  businesses and consumers to expect a rising standard of living, the Fed  may be forced to adjust borrowing costs.<\/p>\n<p>It  appears consumers may already be assuming higher inflation. Successive  consumer sentiment surveys out of the University of Michigan show a rise  in both one-year and five-year inflation expectations. In the final  February survey, the one-year inflation expectation was 3.4%; in the  initial March survey, it went up to 4.6%. The five-year inflation  expectation was 2.9% at the end of February, but 3.2% in the preliminary  March poll.<\/p>\n<p><strong> <\/strong><\/p>\n<p>There is  a real sense that consumers are eyeing food and energy prices, hard  goods and mortgage rates with a perception that prices are rising. Yes,  core inflation across the past 12 months of data was just 1.1% &#8211; well  within the Fed\u2019s target. Yet there are now signals that the Fed may have  to fend off measurable inflation while it tries to promote economic  growth.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Prices are rising. In February, the Consumer Price Index advanced 0.5%. That follows increases of 0.4% in December and January. This doesn\u2019t exactly represent runaway inflation \u2013to give you some perspective, the CPI rose by almost 1.1% per month across [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[18],"tags":[],"class_list":["post-1119","post","type-post","status-publish","format-standard","hentry","category-blog"],"_links":{"self":[{"href":"https:\/\/billlosey.com\/knowledge-center\/wp-json\/wp\/v2\/posts\/1119","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/billlosey.com\/knowledge-center\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/billlosey.com\/knowledge-center\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/billlosey.com\/knowledge-center\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/billlosey.com\/knowledge-center\/wp-json\/wp\/v2\/comments?post=1119"}],"version-history":[{"count":0,"href":"https:\/\/billlosey.com\/knowledge-center\/wp-json\/wp\/v2\/posts\/1119\/revisions"}],"wp:attachment":[{"href":"https:\/\/billlosey.com\/knowledge-center\/wp-json\/wp\/v2\/media?parent=1119"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/billlosey.com\/knowledge-center\/wp-json\/wp\/v2\/categories?post=1119"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/billlosey.com\/knowledge-center\/wp-json\/wp\/v2\/tags?post=1119"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}