Summary
Earlier this morning, the Labor Department reported that consumer prices rose 0.2% during October, versus the reported 1.2% rise for September. The so-called "core" rate, of special interest to consumers who do not eat, heat or drive, also rose 0.2% during October.
_____
October Consumer Prices
Today's report from the Labor Department indicated a 0.2% increase in the Consumer Price Index during October, versus the 1.2% rise reported for September.
For the few of us who do not eat, heat or drive, the CPI's so-called "core" rate, which excludes food and energy, was reported also to have risen 0.2% in October. Of course, since it materially understates inflation for the vast majority of those who live in the real world, the latter series is the number Wall Street bulls bull!
As of the end of October, the overall CPI stood 4.3% higher than a year earlier. For the 12 months ended October 2004, the year-over-year increase was 3.2%.
Excluding food and energy, the CPI's year-over-year increase as the end of October 2005 was 2.0%. The 12-month change as of October 2004 also was 2.0%.
Other Recent Government's Inflation Data
There are three government inflation or inflation-related series I monitor regularly: the Producer Price Index, the Consumer Price Index and import prices. I believe and believe very strongly that the PPI and CPI in particular materially understate the actual inflation and inflationary pressures now affecting the US economy. Nevertheless, keeping track of these series remains important. These are the numbers most visible to the public, and they are the numbers hyped incessantly in places like "Tout TV" and the other venues in the regular propaganda loop. They also have been among the numbers most frequently cited by Alan Greenspan as the basis for Federal Reserve monetary policy.
Even including the understatement inherent in the PPI and CPI, they still are showing an uncomfortable acceleration. For instance, through October, the PPI was up 5.9% year over year. As of October 2004, the 12-month change was 4.4%. As for the CPI, through October, it showed a year-over-year rise of 4.3%. For the year ended October 2004 , the 12-month change was 3.2%.
(See also the graph on the home page of the "JWGS" website, and the graph on the home page of the GRA website.
The "Core" Rate Flimflam
Of course, one of the giant games played with these numbers is emphasizing their change when the "inconsequential" food and energy sectors are removed from the calculations. This constitutes the so-called "core" rate.
I have been consistent over the years in expressing the opinion that it is nothing short of moronic to make a big deal of life as a consumer that is void of price considerations relating to eating, heating, cooling, driving, etc., or life as a businessman in which energy costs in particular are taken so lightly.
However, this is done all the time by Wall Street. Well, not quite all the time -- only in instances when the removal of food and energy costs results in more favorable inflation data.
In addition, Alan Greenspan and other Federal Reserve officials are constantly citing various inflation measures that remove food and energy costs. Let's just hope this is done mostly for propaganda purposes, and that these folks have more introspective moments in private.
Following are results for the PPI, CPI and import prices over various periods. (NOTE: The applicable portions of the data shown in the tables below will be posted to the "Data & Charts" section of the GRA website.)
------------------------------------------------
Producer, Consumer and Import Prices (Com-
posite Results & Annual PPI, CPI Results)
------------------------------------------------
Producer Consumer Import
Price Index Price Index Prices
Month/ ----------------------------------------
Year Y/Y L3Mos* Y/Y L3Mos* Y/Y L3Mos*
------------------------------------------------
10/05 5.9% 13.2% 4.3% 8.0% 8.1% 14.9%
09/05 6.7% 14.2% 4.7% 9.4% 10.2% 21.7%
08/05 5.1% 6.1% 3.6% 4.2% 8.2% 16.5%
07/05 4.6% 1.8% 3.1% 1.9% 8.2% 6.4%
06/05 3.6% 0.0% 2.5% 1.9% 7.4% 5.3%
05/05 3.6% 3.2% 2.8% 4.4% 5.9% 9.4%
04/05 4.7% 6.7% 3.5% 6.2% 8.4% 17.1%
03/05 5.0% 5.4% 3.2% 4.3% 7.6% 15.4%
02/05 4.7% 1.1% 2.9% 1.7% 6.1% 0.0%
01/05 4.2% 2.1% 2.9% 1.3% 5.7% -4.5%
================================================
10/04 4.4% 7.8% 3.2% 3.2% 9.9% 15.3%
------------------------------------------------
*Trailing three-month com-
pound annual rate of change.
------------------------------------------------
Producer Price Index
(Finished Goods)
-- Y/Y Change
---------------------------
Excl. Food
Year All Items & Energy
---------------------------
2005 -- 10 Months
-----------------
[1] 5.5% 1.5%
[2] 6.6% 1.8%
========================
2004 4.3% 2.2%
2003 4.0% 1.0%
2002 1.2% -0.6%
2001 -1.8% 1.0%
2000 4.1% 1.6%
---------------------------
Consumer Price Index
(All Urban,
All Items)
-- Y/Y Change
---------------------------
Excl. Food
Year All Items & Energy
---------------------------
2005 -- 10 Months
-----------------
[1] 4.0% 1.8%
[2] 4.8% 1.4%
========================
2004 3.4% 2.2%
2003 1.9% 1.1%
2002 2.4% 2.0%
2001 1.5% 2.7%
2000 3.4% 2.6%
---------------------------
[1]Nonannualized.
[2]Annualized.
---------------------------
Import Prices (Detail)
-----------------------------------------------------
U.S. IMPORT PRICES - % CHANGE
(3-Mo.= Three-month Compound Annual Rate)
-----------------------------------------------------
All Imports, Petroleum
All Imports Excl. Petrol. Imports Only
Month/ -------------- --------------- ---------------
Year Mo. 3-Mo. Y/Y Mo. 3-Mo. Y/Y Mo. 3-Mo. Y/Y
-----------------------------------------------------
10/05 -0.3 14.9 8.1 0.8 7.7 3.7 -4.4 52.1 30.9
09/05 2.3 21.7 10.2 1.0 3.6 2.8 8.0 145.1 52.2
08/05 1.4 16.5 8.2 0.1 -1.2 1.9 7.5 152.8 45.6
07/05 1.2 6.4 8.2 -0.2 -2.3 2.1 7.7 57.9 47.3
06/05 1.2 5.3 7.4 -0.2 0.0 2.3 8.9 35.3 39.9
05/05 -0.8 9.4 5.9 -0.2 2.0 2.6 -4.4 59.2 27.1
04/05 0.9 17.1 8.4 0.4 3.2 3.0 3.6 132.7 45.5
03/05 2.2 15.4 7.6 0.3 2.8 2.9 13.4 120.6 40.1
02/05 0.9 0.0 6.1 0.1 3.2 2.8 5.1 -17.9 29.8
01/05 0.6 -4.5 5.7 0.3 6.6 3.1 2.2 -47.4 24.2
=====================================================
10/04 1.6 15.3 9.9 -0.1 1.2 2.9 11.1 143.7 67.8
-----------------------------------------------------
|
