Inflation Washes Ashore

Ever since the election of Donald Trump as U.S. President, the stock market has gone into a “Trumpflation” mode of trade. The early evidence of inflation may have finally washed ashore.

U.S. January prices rose 0.6% and core prices rose 0.3% month-over-month. Both were slightly higher than expected, and the rise was the highest since February, 2013. Year-over-year the Consumer Price Index (CPI) rose 2.5%, the highest since march, 2012. The CPI incorporated some particularly strong price hikes:

“Clothing prices jumped 1.4 percent, the most since February 2009. Men’s apparel surged by the most on record. New vehicle prices climbed 0.9 percent in January, the biggest advance since November 2009.”

The price hikes were enough to push real hourly wages down by 0.5% form December and unchanged year-over-year.

This is just one month of data, yet it precedes any of the policy changes or fiscal stimulus measures which promise to introduce inflationary pressures into the U.S. economy. InflationWatch is officially back on alert for the U.S.!

One Comment on “Inflation Washes Ashore”

  1. Herkie says:

    I am a 100% disabled vet on a fixed income, as well as a former financial analyst with a degree in Finance, these two things mean A) I watch prices CLOSELY and B) am not baffled by BLS magic when it comes to price data.

    I admit that my observations are anecdotal and regional with regional causes and effects that can tip local prices one way or the other which might not be valid outside the area I live in, but, when I see prices rising so far so fast and being sustained to the point that it looks more like hyperinflation than garden variety inflation, well, some of it has to be affecting the greater economy.

    In a period since 2013/14 when I get letters from the government telling me why I will get no COLA increase or a third of one percent as I did for 2017 because of “the current negative inflation environment,” well it sort of makes my blood boil. In that time I have seen rents in this county rise from $700 for a 2 bed townhouse to well over $1,300 for a near 86% increase.

    A few food items have dropped or stayed the same but most of what I normally buy has risen by 15-300% with an average for the grocery bill overall of about 40%.

    Insurance, thank god I am a veteran and have the VA for healthcare, because health insurance here is up by from 40-65% in this period in Oregon. Auto insurance that I am required to buy is also up by 40% in that time.

    Aside from gasoline and home electronics nothing has risen at less than 10% since mid/late 2013.

    The point of all this is that we are being told by the government, and daily by the financial media that there is NO INFLATION, and the message is if you are struggling to get by on the same amount of money you have had for income as you have had for several years then the fault is with you because prices are the same now as they have been basically since 2010.

    I resent this, it seems to impart the message that we are either crazy or stupid when we have to find ever new ways to keep expenditures in the bounds of our incomes, dropping subscriptions, or eliminating cable channels, or increasing the deductibles on insurance, or foregoing entirely the produce section at the supermarket. I got rid of the BMW and bought a new pickup truck in 2015 in part because of insurance and in part because I saw that if things got any worse I would need alternative shelter, housing was not going to be an option much longer.

    Well, then comes an election that was obviously tainted, and the “winner” was of the ilk not seen on the world stage since 1933. I was invited by a friend in Australia to visit with an eye toward relocating there. I went for their summer for three months starting January 10. Unfortunately I smoke and Marlboro’s are AUS$31 per pack there, for an average pack a day smoker that is like buying Phillip Morris a well appointed mid range Mercedes.

    Well, the last ditch hideout is thanks to my biological father who was from Galway, Ireland. I now reside in the middle of the island, and while the cost of living if anything is higher here at least it does not come with an evil buffoon for it’s president. True it is part of the EU which is a Rube Goldberg invention that must fail badly, already is failing. But, it is a mostly rural island nation, neutral with no strategic significance, plenty of water and an agricultural history. It is also thousands of miles downwind from North America which will be great when you are Tweeted into the next major war which may leave you glowing in the dark.

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