No Inflation Here!
There is a tremendous fixation on the inflationary components of CPI of which the most obvious driver is gasoline without which even the rate of headline inflation would be dropping, and the largest risk would be falling inflation. [Deflation? Yes, that is the case when you look at which] consumer prices have declined over the past few years. Words: 460
So says Matt Busigin (www.macrofugue.com) in an article* which Lorimer Wilson, editor of www.munKNEE.com , has further edited ([ ]), abridged (…) and reformatted below for the sake of clarity and brevity to ensure a fast and easy read. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement. Busigin goes on to say:
Used Cars:[As the graph shows below, there was a..slight bump in prices of used cars] after the [end of the] Cash For Clunkers program as [a result of] supply being destroyed…[but prices are declining once again. No inflation here!].
Despite the [dramatic move up in] cotton prices from $40 in January 2009 to $220 this year, the end-price of clothing has cratered [as shown below and has not risen much, if at all, since 2005! No inflation here!]
Hotel Costs:[As the graph below shows, the cost of hotel stays has turned down in the past 6 months and is down considerably from the peak in early 2008. No inflation here!]
Furniture & Appliances:
Recreational spending has certainly fallen due to the recession, but prices haven’t responded much to the substantial ex-transfer income rebound in the past year. [No inflation here!]
With the prices of the two largest components of consumer expenditures (housing: 33.8% and transportation: 17.6%) dropping so dramatically as they have over the last while, inflation will remain subdued…
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Related Articles of Interest:
1. Inflation Coming? Treasury Market Says Otherwise! http://www.munknee.com/2011/05/inflation-coming-treasury-market-says-otherwise/
- The above article consists of reformatted edited excerpts from the original for the sake of brevity, clarity and to ensure a fast and easy read. The author’s views and conclusions are unaltered.
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