Consumer Price Index
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The Best Ways to Profit from Food Inflation
Though tame through most of last year, food inflation has begun to surge again in 2013 - just as Money Morning Global Resources Specialist Peter Krauth predicted it would.
"Food inflation hasn't reared its head for some time, and I think it's about to start making headlines again before long," Krauth wrote in a Jan. 18 note to subscribers of his Real Asset Returns investment service.
Sure enough, an inflation report yesterday (Wednesday) from the Labor Department showed that the biggest increase in January prices came in the food category.
Food prices - for both groceries and food eaten at restaurants - rose 0.7% in January, compared with December, accounting for more than three-fourths of the increase in the Producer Price Index (PPI).
The biggest driver of food inflation in January was the cost of vegetables, which rocketed 39%, withbroccoli, cauliflower and lettuce increasing the most.
The U.S. Department of Agriculture's Economic Research Service is projecting food prices in 2013 will increase 3% to 4%, an annual increase the agency says is above the historical average.
The ERS said it expects animal-based food products (mostly meats) to be hit hardest, with cereals and bakery products also seeing above-average price increases.
The return of food inflation to the U.S. should come as no surprise, as it has become a worldwide trend over the past decade.
The Food Price Index developed by Food and Agriculture Organization of the United Nations has more than doubled from 97.7 in 2003 to 209.8 now following a decade of stability. (The index stood at about 102 in 1993.)
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U.S. Consumers Get Creative to Handle High Food and Fuel Prices
There's no question the staggering rise in food and fuel prices will eat away at U.S. households' income in coming months.
But there is the question of how U.S. consumers will cope with those increased costs - especially when so many are already worried about their jobs, savings, investments and retirement.
With gas prices nearing $4.00 a gallon, and the consumer price index (CPI) in February for food-at-home up 2.8% from 2010, U.S. consumers are facing an economic double whammy. As food and fuel expenses make up a larger slice of household budgets, U.S. consumers have to evaluate just which goods are worth buying.
Montana resident Myriam Garcia some days has to choose between filling up her truck with gas or buying food.
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Hidden Inflation: Why Prices Are Rising Faster Than You Think
Rising prices are hitting U.S. consumers a lot harder than the U.S. Federal Reserve - or the U.S. government - would have us believe. The government-issued consumer price index (CPI) for January showed that "core inflation" - which includes prices for all items except food and energy - was up only 1% from the same month the year before.
By excluding food and energy prices, as volatile as they may be, the CPI fails to convey the pain that rising prices are inflicting on American households. Indeed, some economists have claimed that the true rate of inflation is closer to 8% or 9%.
To get a true picture of the current inflation situation - and to understand its impact and potential dangers (as well as several investment opportunities) - Money Morning Executive Editor William Patalon III sat down with Chief Investment Strategist Keith Fitz-Gerald for a question-and-answer session on the topic.
For three inflation-fighting investments, please read on.... -
Hidden Inflation: Rising Prices Are Hitting Consumers Harder Than the Fed Will Admit
Any U.S. consumer that goes to the grocery store or the gas station on a regular basis knows that prices are rising.
Unfortunately, those rising prices are set to soar even higher - and their effects on consumers will continue to be ignored by the U.S. Federal Reserve.
The United States has had a break from inflation the past couple years, while it exported higher prices to emerging market economies. The Fed's easy money policies created excess money that flowed overseas, and now those countries are seeing prices rise to threatening levels.
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CPI Shows Inflation May Be a Bigger Problem than the Fed Thinks It Is
A hodge-podge of government reports released Friday has rekindled debate amongst economists over a question central to the future of the U.S. economic recovery: Is inflation slowly on the rise, or is deflation about to sink prices and future growth?
The consumer price index (CPI) rose for the first time in four months in July, signaling higher prices in some sectors and easing concerns that a slowdown would sink the U.S. economy into deflation. Meanwhile, the government released a string of weak economic reports that point to slower economic growth.
The consumer price gauge increased 0.3%, the most in a year, outpacing the 0.2% gain projected by the median forecast of economists surveyed by Bloomberg News, figures from the Labor Department showed Friday. The so-called core rate favored by government economists, which excludes volatile food and fuel costs, met expectations, increasing 0.1%.
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Inflation Isn't Dead, Just Sleeping – And TIPS Can Protect You When It Awakens
Investors are always on the lookout for hot tips. The best tips highlight investments that pack a big potential profit punch, but that haven't yet started their move.
That's just what we have for you here.
We're not talking about the "inside scoop" on some obscure stock. What we're referring to are government-backed "TIPS" - or, as they're more formally known, Treasury Inflation-Protected Securities.
Admittedly, inflation hasn't been a major concern of late. The U.S. Consumer Price Index (CPI) was actually down by 0.2% in May, extending a 0.1% drop in April, while May's core inflation - which is the CPI measured without the volatile food and energy components - was just 0.1% higher. That's why many market analysts and media pundits are now saying deflation is much more of a worry for U.S. markets than inflation.
However, many of Money Morning's top experts - including Chief Investment Strategist Keith Fitz-Gerald and Contributing Editor Martin Hutchinson - disagree with that assessment. Recognizing the inevitable inflationary impact of increasing deficit spending, growing federal debt, rising state and local taxes and a weakening U.S. dollar, they see renewed upward price pressure not too far down the road.
That makes this the perfect time to learn about TIPS and how they can protect you when inflation again rears its ugly head.
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These Five Inflation Plays Will Provide Protection and Profits
Inflation hawks have been warning since 2008 that the spurt of U.S. money creation that began at the end of that year would spark a surge in consumer-price inflation.
And yet the consumer price index (CPI) statistics remain quiet - not giving ammunition to the deflationary camp, but making "inflationists" look silly, as well. Now, however, it is becoming obvious that inflation will soon arrive. But this time it is sneaking in through the back door - courtesy of our emerging-market trading partners.
Fortunately, there are some very clear steps that investors can take to protect themselves from this expected inflationary surge.
To learn about five investments that can battle inflation even as they fatten your portfolio, please read on... -
Producer Price Index Drop Supports Fed's Position on Keeping Low Interest Rates
The Producer Price Index (PPI) saw its biggest drop in seven months in February, fueling the U.S. Federal Reserve's argument that interest rates can remain low "for an extended period" without yet facing dangerous inflationary pressures.
Wholesale prices were down a seasonally adjusted 0.6% in February, the Labor Department reported today (Wednesday), a day after the Fed's one-day policy meeting where it reiterated the need to encourage economic growth through low interest rates.
The central bank's position to keep the federal funds rate at a record low range of zero to 0.25% since December 2008 has sparked inflation concerns among many investors. However, proof of tame inflation buys the Fed more time in deciding when to continue with its "exit strategy" and pull the trigger on a rate hike. The Fed has remained firm on its stance that there is no evidence of rising inflation due to low interest rates.
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Fed Gambles on Low Inflation and a Stable Housing Market
The so-called "exit strategy" has yet to enter the picture.
U.S. Federal Reserve policymakers yesterday (Wednesday) announced that the benchmark Federal Funds rate would remain in its record-low range of 0.00% to 0.25% for an "extended period." And policymakers also said that the nation's central bank would continue with its plan to wind down its purchases of agency debt and mortgage-backed securities.
The term "exit strategy" is a financial euphemism for boosting interest rates. By keeping short-term interest rates at what many experts say are artificially low levels, the Fed is betting that inflation will remain subdued in the short and medium-term and that the beleaguered U.S. housing market will be able to stage its recovery without crutches.
