REAL Consumer Price Index up 5.2 percent in 2012

All of the things that go into the CPI are important parts of the consumer experience, but they don't really reflect how people live day to day—most people don't buy refrigerators and cars every day, after all. That's why one group of economists has developed its own real-life index. And by this measure, prices have in recent months been growing far faster than government figures indicate.

The American Institute for Economic Research, a Massachusetts-based firm, produces a monthly Everyday Price Index, which finds that as of September, prices had grown by 5.2 percent over the course of 2012. That's far higher than the 1.9 percent seasonally adjusted increase according to CPI data.

The price index includes basics like food, gasoline, and utilities, but also includes other common expenditures like cable and satellite TV, movie and sporting event tickets, and postage. Meanwhile, it excludes big-ticket purchases like appliances and computers, as well as rent and mortgage payments. Read more >>

Inflationary forces are gathering in the UK, Europe and U. S. with input inflation rising strongly

By notayesmanseconomics
I have been reporting since last summer about the rise in commodity and crude oil prices and their potential impact on world inflation. Some countries are already suffering from the effects of this with Chinese consumer inflation for example having risen to 5.1% and retail price inflation in the UK is at 4.7%. I reported back on the 5th of January that overall Euro zone inflation had risen above target to 2.2% with Greece the outlier with her consumer price inflation now running at 5.2% although in her case the rise is partly attributable to a rise in consumer taxes such as Value Added Tax.So the impact of the commodity price rises has begun to feed into measures of inflation.

What is currently causing this?

I wrote yesterday about the recent rises in commodity prices as measured by the Commodity Research Bureau spot index which rose again on the day by 1.39 to 537.91. The main contributors to the rise were the livestock and foodstuff components both of which rose by more than 1%. Indeed with their being riots in one or two parts of the world at this time over food prices I took a closer look at the foodstuffs component of the index. The rally started on November 29th of last year when the index closed at 400 whereas last night it closed at 468.66 for a rise of 17% in just over a month.Heady stuff indeed. There were problems with food prices back in 2008 but the foodstuffs index used hit only hit a peak of 449 back then which we now have comfortably passed.

The foodstuffs index has the following constituents: Butter, Cocoa, Corn, Hogs, Lard, Soybean Oil, Steers, Sugar and two measures of wheat prices. Read more...

Highest Consumer Price Increase in a Year

A busy month for car dealerships lifted retail sales for the first time in three months while more expensive food and gas boosted consumer prices by the most in nearly a year.

Retail sales rose 0.4 percent last month, buoyed by auto and gasoline station purchases. Most retailers reported declines for the month. Excluding autos, sales climbed 0.2 percent, the Commerce Department said Friday.

Consumer prices rose 0.3 percent in July, the Labor Department said. That's the largest increase since last August to the Consumer Price Index, the government's most closely watched inflation measure. Energy prices jumped for the first time in five months.

Excluding volatile food and energy prices, the so-called "core" index increased 0.1 percent in July. The cost of housing, clothes, and used cars and trucks all rose. Over the past year, consumer prices rose 1.2 percent. That's up slightly from last month's 1.1 percent pace but still a mild increase.

Broad declines in retail sales have economists concerned that spending will slow further in the second half of this year. Households are saving more and spending less as they struggle with high unemployment and lackluster job growth. More...