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3 posts tagged with "inflation"

A tale of two PPI inflation stories.

Posted by Tim Hope on 8/22/08 10:10 am

Each month the U.S. Bureau of Labor Statistics publishes the Producer Price Index (PPI) which is an index measuring changes in wholesale prices.  Despite the fact that food and energy prices have increased significantly over the last few months, they are routinely excluded in official inflation figures so as to arrive at a “core” rate.  While the current “core” rate is a relatively modest 3.5%, it is at a 17 year high.  In addition, it is also 75% higher than the high end of the Fed’s 1-2% target rate.  Looking at the PPI as a whole, the index is at a 27 year high of 9.8%.  Since some use the PPI as a precursor to movements in the Consumer Price Index (CPI), such developments may have a significant impact on the behavior of consumers and wage earners.

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Gold and Inflation

Posted by Tim Hope on 6/25/08 10:15 am

Gold has experienced a recent run up in price similar in nature to other commodities.  While it can be argued that inflationary dangers are very real, and thus may contribute to further price advances, a hard look at the historical data indicates that at current levels gold may be overvalued relative to the consumer price index. 

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Inflation Brewing In China

Posted by Tim Hope on 6/23/08 11:16 am

As of June 18th the Chinese stock market is down over 40% year-to-date in dollar terms compared to about a 9% drop in the S&P 500.  While there may be many reasons for the weakness in Chinese stocks, an escalating inflation rate may well be a significant contributing factor. 

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