Thursday, March 1, 2012

Two Articles About Inflation: ISM and Everyday..

First up Economic Policy Journal:

Serious Evidence of Developing Price Inflation 
The ISM Prices Index registered 61.5 percent in February, 6 percentage points higher than the 55.5 percent reported in January. This is the second consecutive month this index has reflected an increase in the price of raw materials.

Notice the percent of industries reporting higher prices is steadily climbing, while the percent reporting lower prices is declining dramatically.



Feb 201231618+2361.5
Jan 2012305119+1155.5
Dec 2011215326-547.5
Nov 2011195229-1045.0

Thirteen industries report paying increased prices during the month of February in the following order:

Nonmetallic Mineral Products;
Fabricated Metal Products;
Plastics & Rubber Products;
Primary Metals; Machinery;
Chemical Products;
Miscellaneous Manufacturing;
Printing & Related  Support Activities;
Furniture & Related Products;
Electrical Equipment, Appliances & Components; Transportation Equipment;
Computer & Electronic Products;
Food, Beverage & Tobacco Products.

 The only industry reporting paying lower prices on average during the month of February is Paper Products....MORE 
And from CBS MoneyWatch:

Inflation: Not as low as you think
Forget the modest 3.1 percent rise in the Consumer Price Index, the government's widely used measure of inflation. Everyday prices are up some 8 percent over the past year, according to the American Institute for Economic Research.

The not-for-profit research group measures inflation without looking at the big, one-time purchases that can skew the numbers. That means they don't look at the price of houses, furniture, appliances, cars, or computers. Instead, AIER focuses on Americans' typical daily purchases, such as food, gasoline, child care, prescription drugs, phone and television service, and other household products.

The institute contends that to get a good read on inflation's "sticker shock" effect, you must look at the cost of goods that the average household buys at least once a month and factor in only the kinds of expenses that are subject to change. That, too, eliminates the cost of housing because when you finance your home with a fixed-rate mortgage, that expense remains constant until you refinance or move....MORE
HT: Krugman-in-Wonderland