cpi shows inflation over 9% using 1980 methodology

One of the sneakiest of their options is to reduce how much product they put in a package, but keep the price the same. A bag of sugar costs the same, but quietly, they reduce the weight from five pounds to four. They put fewer potato chips into the same size bag, or add more air into cheese and ice cream. Consumers who might have paid $6 a pound for coffee now pay the same for three-quarters of a pound, reports the Spokesman Review.

In the case of coffee, that's a 33% price increase that manufacturers are probably hoping you won't notice. Is there any logical reason for you to pay 33% more for coffee? Well, the price of coffee has gone up even more by one measure -- according to Espresso Coffee Guide, the iPath Dow Jones-UBS Coffee Total Return Sub-Index ETN has gone up 70% since the end of 2009. And Peet's Coffee & Tea (PEET) raised its prices in September to respond to a 35% rise in the price it pays for green coffee beans since the beginning of 2010.

But an analysis of a broader basket of consumer products suggests that coffee is among the most inflated items. A January study by Consumer Reports provides the following examples of reduced package sizes. Assuming the manufacturers are keeping prices the same, the following 10 examples represent an average price increase of 12.2%:

* Tropicana orange juice +7.8% due to a reduction in the amount of product from 64 to 59 oz.;
* Ivory dish detergent +20% from 30 to 24 oz.
* Kraft American cheese +8.3% from 24 to 22 slices;
* Kirkland Signature (Costco) paper towels +11.6% from 96.2 to 85 sq. ft.;
* Haagen-Dazs ice cream +12.5% from 16 to 14 oz.;
* Scott toilet tissue +9% from 115.2 to 104.8 sq. ft.;
* Lanacane first aid spray +12.4% from 113 to 99 grams;
* Chicken of the Sea salmon +13.3% from 3 to 2.6 oz.;
* Classico pesto +19% from 10 to 8.1 oz.; and
* Hebrew National franks +8.3% from 12 to 11 oz.

Are Companies Fooling the CPI?

January's inflation statistics do not reflect that 12.2% inflation. The core Consumer Price Index -- which excludes what are considered "volatile" food and energy prices -- increased just 0.2% according to the Labor Department. When you include food and energy -- which, after all, are things that consumers actually have to buy, the CPI was up 0.4%, 0.1% more than economists had expected -- and food and energy were responsible for more than two-thirds of the overall CPI rise.

Sponsored Links

But does the CPI reflect those stealth price increases? According to the Bureau of Labor Statistics, the answer is maybe. The BLS notes that it sends data collectors into stores every year and "if the selected item is no longer available, or if there have been changes in the quality or quantity (for example, eggs sold in packages of ten when they previously were sold by the dozen) of the good or service since the last time prices were collected, the economic assistant selects a new item or records the quality change in the current item."

It is possible that the BLS's national office makes adjustments to reflect smaller quantities. According to the BLS, "the recorded information is sent to the national office of BLS, where commodity specialists who have detailed knowledge about the particular goods or services priced review the data. These specialists check the data for accuracy and consistency and make any necessary corrections or adjustments, which can [include] an adjustment for a change in the size or quantity of a packaged item."

See full article from DailyFinance: http://srph.it/i3idhh

how about the MIT billion price index only including goods, and not services?

RS, any proof that BLS hasn't caught on to the smaller sizes, which i believe you mentioned last year as well?

Good to see that Riversider has branched out from cream cheese to wieners. There's a joke in there somewhere.

maybe the franks were all beef. but...

kraft american cheese, haagen-dazs ice cream and chicken of the sea salmon (RS, you going to sub in for your sock-eye?).

healthy choices. i thought you said prices weren't so bad if one were eating prepared/frozen foods? is that not true also? can we believe a word you write?

no

>Good to see that Riversider has branched out from cream cheese to wieners. There's a joke in there somewhere.

Please explain it.

hfscomm1---you still don't get it, do you?

Size differences are included in CPI. riversider is delusional. Of course it's calculated per unit of measure.

I don't have a dog in this hunt. So I have not contributed to this thread. But came across this quote by Marc Faber and I thought the language was worthy of our SE posters. Maybe we should initiate him into the fray. This quote was from 2/3/11 and he is speaking about inflation in the US:

"The annual cost of living increases are more than 5% today and the BLS is continuously lying about the inflation rate, including Mr Bernanke, he's a liar. Inflation is much higher than what they publish. I think that inflation is between 5% and 8% per annum in the US, and in Western Europe, a little bit lower, also 4-5% per annum." - in CNBC

What a surprise. More Chicken Little from apt23.

Cost-of-living and inflation are two different things. In any case, if anyone is willing to actually put their money where their mouth is w.r.t. inflation at 5-8%, I'll take the other side. As I offered to RS with his whining about cream cheese and milk, I'll even do it on your own personal basket of goods. Who knows, put on a large enough trade, and maybe you can graduate to proper cheese.

Marc Faber is full of shit on this and many issues. If inflation was really 5-8% a year, the bond market would have been demanding much higher interest rates than they have been for every type of debt from USTs to corporate junk bonds. Faber consistently has a political ax to grind.

Actually it's common sense. The country is filled with people who construct actual budgets. And I can assure you those budgets are not ruled by Hedonics, Substitution, geometric weightings and rent equivalent real estate costs in the way the BLS numbers are. And why are you so sure that the methods this country uses TODAY to calculate a number is better than the one it chose twenty years ago or will use in the future.

When the Boskin commission's findings came out there it was widely seen as a political method to save the gov't money.

"If inflation was really 5-8% a year, the bond market would have been demanding much higher interest rates"

Not really. Guess what our pal RS claims to be doing with his money? Buying bonds and paying down his mortgage. I've even given him the option of being paid inflation over a basket of goods of his own choosing, but he seems to like low-rate fixed debt better.

It's actually very simple. I value certainty over uncertainty. Paying down a debt provides a known return. Short duration high quality bonds offer low risk and allow for the potential to rollover into higher yielding ones. Stocks should reward with dividends that exceed the inflation rate, but high valuations mean we cold retrace the S&P's move from 666. I agree commodities offer a very good way to play inflation, but I don't like the tail risk(i.e. what if China implodes)? Look what the housing bubble breaking did to commodities two years ago. Demand fell and only now is it resuming its previous trajectory. In short, not a lot of great options for the crowded trade.

it certainly is simple.

you come here screaming endlessly about inflation. if your claims of 10% inflation were true and you're earning 2%, where would that leave you after 3 years?

perhaps you would like to check the meaning of hypocrisy?

Now that the Faber comment has fanned some flames, allow me to post the other side. The following is Kyle Bass's February letter. Within it (page 15) is a recent Goldman Sachs chart on world wide food inflation which shows the US as >1.15 --sorry I can't figure out how to extract the chart from the letter and too lazy to find it elsewhere. But according to this chart, looks like there might be some unrest in the Philippines.

http://www.scribd.com/doc/48881153/Kyle-Bass-Hayman-Investor-Letter-February-2011

>perhaps you would like to check the meaning of hypocrisy?

You have it on the tip of your tongue?

I think Ino works for the Fed. Bernanke has stated his goal is to force everyone into risky assets telling us that the Fed will make investing in short safe assets will not provide good returns. Unfortunately when everyone piles onto the risk trade it's often a sign of even worse returns. And contrary to what the 20 year old quants will tell you, risk is not always hedgable. Sometimes it's better to lose 1% than lose 20%

but according to you inflation is 10% and you're earning 2%---that's a loss of 8% not 1%

Charles Evans of the Fed won't be happy until everyone's purchasing power decreases 1.5% per year and he doesn't care about food or energy prices.

He therefore welcomed signs of a slight pick-up in inflation – the consumer price index excluding food and energy rose by 1 per cent on a year ago in January – but said that he would remain concerned until these “core” price rises reached 1.5 per cent.

Mr Evans defended the Fed’s use of core inflation measures, despite rapid rises in food and energy prices, saying that commodity prices had been volatile in the past and that businesses did not yet seem to be able to pass the rises on to consumers.

http://www.ft.com/cms/s/0/49d913e0-3eb4-11e0-834e-00144feabdc0.html#axzz1Em3VGaz7

Must watch Bill Fleckenstein on Dylan Ratigan, how Central Bank policy is causing food price rise, supply and demand issues and bottlenecks

http://www.msnbc.msn.com/id/21134540/vp/41743893#41743893

The world faces a protracted bout of extremely high food prices, the US government has warned, overwhelming farmers’ ability to cool commodity markets by planting millions of additional hectares with crops.

The US Department of Agriculture on Thursday forecast nominal record farm-gate prices for corn, wheat and soyabeans in the crop year that begins with the 2011 harvests. It added that food inflation would surge in the second half of this year as wholesale prices filtered through the supply chain, affecting consumers.

http://www.ft.com/cms/s/0/f4189e60-404a-11e0-9140-00144feabdc0.html#axzz1EvMogugb

The CRB FOOD STUFF'S INDEX CONTINUES TO GO UP(DOWNWARD MOVE FROM 2008-2009 HAS BEEN ERASED)

http://research.stlouisfed.org/fred2/data/PPICFF_Max_630_378.png

“Manufacturers in a number of Districts reported having greater ability to pass through higher input costs to customers,” the Fed said in its Beige Book survey, published on Wednesday.

http://www.ft.com/cms/s/0/b2de27c4-4501-11e0-80e7-00144feab49a.html#axzz1FX4ICv6Y

The price of goods imported to the U.S. climbed 1.4% in February from a month earlier as costs increased for energy, industrial supplies and food.

Import prices increased 7% over the past five months, the Labor Department said Tuesday, with gains of more than 1% each month. Overall prices were up 8.5% since February 2010. While petroleum has been a major driver of import prices, other raw materials also are contributing to overall gains. Excluding petroleum, import prices increased 0.6% from January. Non-oil prices were 3.5% higher than in February 2010.

http://online.wsj.com/article/SB10001424052748704662604576202721889103028.html?mod=googlenews_wsj

but, of course, the very next paragraph goes on to say,

"But underlying inflation should remain relatively tame as other product prices face downward pressure due to relatively weak demand amid high unemployment."

whoops....there goes riversider, the lying pig once again.

Why inflation hurts more than it did 30 years ago?

Back in the %u201880%u2019s, the money people made typically more than made up for high inflation. In 1981, banks would pay nearly 16 percent on a six-month CD. And workers typically got pay raises to match their higher living costs.

No more.

http://newssun.suntimes.com/business/4404239-420/why-inflation-hurts-more-than-it-did-30-years-ago.html

Back in the 80 's

High short term rates in the 1980's were Volcker's response to fight off inflation. He pushed rates up to sop up excess money and reduce demand for goods and services. Contrast that with Bernanke who is playing the opposite part of the game. Bernanke wants people to spend their savings buy goods and services and is willing to sacrifice and increase in the inflation rate to get there. One downside is that today unlike in years past people on a fixed income are less protected from increases in the inflation rate.

"Days Of (Inflationary) Rage Are Here: Man Goes On Shooting Rampage After Learning Taco Bell Hikes Prices On Beefy Crunch Burrito By 50%"

http://www.zerohedge.com/article/man-goes-shooting-rampage-after-learning-taco-bell-hikes-prices-beefy-crunch-burrito-50

Ruh roh...

Duh! That's fvcked up!

As if there's any beef in that taco bell shell..

On a side note- Bernanke, Geithner and by implication Obama said the banks are doing just fine so can start buying back stock and paying more in dividends, but no word is mentioned about the elderly and people living on fixed income who get no cost of living adjustments or interest on their savings. And of course the elderly are not able to shift from CD'S to stocks.

Last week, a Texas man brandishing an assault rifle was involved in a three-hour shoot-out with police and had to be subdued with tear gas after ordering seven Beefy Crunch Burritos at a Taco Bell drive-through and being informed that their price had risen from 99 cents to $1.49

Taco Bell may well not be the villain here. It was recently alleged in a class-action lawsuit that only 35 per cent of what the fast-food chain describes as “beef” meets the strict technical definition (meat from a cow). The remaining 65 per cent is claimed to be made from fillers such as potassium lactate, modified corn starch, malto-dextrin and autolyzed yeast extract. Taco Bell has said it vigorously disputes the allegations made about its food – but if the class action claims were proved to be true, it could be seen as an ingenious attempt to hold the line on meat price rises.

http://www.ft.com/cms/s/0/1503e4a8-5708-11e0-9035-00144feab49a.html#axzz1HnJ4vcaC

nflation is "going to be serious," Wal-Mart U.S. CEO Bill Simon said during a meeting with USA TODAY's editorial board. "We're seeing cost increases starting to come through at a pretty rapid rate."

http://www.usatoday.com/money/industries/retail/2011-03-30-wal-mart-ceo-expects-inflation_N.htm

The economy is 2/3 services. As long as unemployment remains high, and as long as the technology component of services keeps falling, you will not get inflation in 2/3 of prices.

Great! The people who have live in maids won't pay more..

...or the people who get their haircut, taxes done, or shop in stores or eat in restaurants manned by people who earn wages.

Cost of Hair cuts is up. Cost of eating in Restaurants also up. Even Taco Bell raised their prices.

There is little systematic evidence that wages (either conventionally measured by compensation
or adjusted through productivity and converted to unit labor costs) are helpful for
predicting inflation. In fact, there is more evidence that inflation helps predict wages. The
current emphasis on using changes in wage rates to forecast short-term inflation pressure
would therefore appear to be unwarranted. The policy conclusion to be drawn is that inflation
can appear regardless of recent wage trends.

https://www.clevelandfed.org/research/PolicyDis/pd1.PDF

It turns out that the vast majority of the published evidence suggests that there is little
reason to believe that wage inflation causes price inflation. In fact, it is more often
found that price inflation causes wage inflation. Our recent research, which updates and
expands on the current literature, also provides little support for the view that wage gains
cause inflation. Moreover, wage inflation does a very poor job of predicting price inflation
throughout the 1990s, while money growth and productivity growth sometimes do a
better job. The policy conclusion to be drawn is that wage inflation, whether measured
using labor compensation, wages, or unit-labor-costs growth, is not a reliable predictor of
inflationary pressures. Inflation can strike unexpectedly without any evidence from the
labor market.
Data

https://www.clevelandfed.org/research/PolicyDis/pd1.PDF

Empirically, prices lead wages. If it were the other way around, wages would be in some kind of leading inflation indicator, such as the one created by the Economic Cycle Research Institute.

While the ECRI refused to discuss the composition of its Future Inflation Gauge when I called Friday, wages aren’t in the index because “they aren’t a good leading indicator of inflation,” a then-less-secretive research director told me in 2000.

http://www.businessweek.com/news/2011-04-03/don-t-wait-for-your-paycheck-to-signal-inflation-caroline-baum.html

The resulting rise in prices likely reflects a long-term trend, separate from the routine ups and downs that are traditional for oil and other commodities. That, in turn, means that prices could be rising faster than Americans’ incomes for some time to come.

Evidence of this long-term dynamic has been emerging for much of the past decade. The price of every major commodity has marched upward for most of that period, interrupted only during the 2008-2009 financial crisis. The price of oil was $26 a barrel at the end of March 2001, and $108.47 on Monday.

“What really matters is how fast China and India and the Middle Eastern countries recover,” said Robert Weiner, a professor of international business at George Washington University who studies energy markets. “As long as they keep doing that, that will put upward pressure on the price of oil.”

The world’s central banks, including the Federal Reserve, have typically ignored the ebbs and flows of commodity prices, instead focusing on “core” measures of inflation that capture the underlying trends.

But if commodity prices must now be added to other inflationary pressures, policymakers may need to keep interest rates higher than they would otherwise. The European Central Bank appears poised to raise rates this week, reacting to higher fuel prices.

But for the United States, that option is less attractive than in the past because of the effect higher rates could have on the already burdensome federal budget. In the early 1980s, the Fed successfully ended double-digit inflation by aggressively raising interest rates, though at the cost of a deep recession. The same sorts of interest rate increases now could be ruinous for government finances.

In 1981, when the federal government’s cost to borrow money by issuing a three-month Treasury bill spiked to 14 percent, government debt was only 40 percent of the nation’s overall economic output. Now it is above 90 percent.

Even with the rise in rates that the Congressional Budget Office forecasts, from near zero today to 4.4 percent in 2017, the cost to service the debt is set to rise to $600 billion a year, and aggressive Fed action to address rising commodity prices would make that burden even greater.

“It’s not that the Fed won’t be able to raise interest rates,” said Diane Swonk, chief economist at Mesirow Financial, “it’s that it will be very painful when they do for a variety of reasons.”

http://www.washingtonpost.com/business/economy/inflation-inflicting-pain-as-wages-fail-to-keep-pace-with-price-hikes/2011/03/09/AF6K2seC_story.html

It's funny how nobody has commented on how the Fed once argued that wage inflation was necessary for price inflation. Maybe the current Fed's arguments are just political or non-sense... or maybe they always are.

The WSJ article I posted above argued just that, dummy.

actually i got that backwards. the article argued that wage inflation had zero correlation.

Marc Faber is full of shit on this and many issues. If inflation was really 5-8% a year, the bond market would have been demanding much higher interest rates than they have been for every type of debt from USTs to corporate junk bonds. Faber consistently has a political ax to grind.

no really it's all about alternatives

If this is the "gov't stats" g-d help us

But looking under the surface, the news is not all that rosy. Over the past six months, the CPI has increased at a 4.7% annualized rate, well above its long-term average, and reminiscent of the heady inflation we experienced in the 2004-2007 period. Over the past three months, the CPI is up at a 6.1% annualized rate. It's thus quite likely that the year over year CPI figure will exceed its 30-year average (3.1%) by a comfortable margin before this year is out.

http://seekingalpha.com/article/263805-consumer-price-inflation-is-rising

Christopher Whalen’s “Inflated” deals with one aspect of zombie economics – inflation. Changes in price level are ambiguous at best. Even measuring it can present considerable challenges – some years ago, Argentina consciously decided to exclude items where the price rise was particularly high on the basis that no one could afford to buy such products, justifying their irrelevance to the measured inflation rate. Government everywhere, similarly, manipulate inflation measures.

The real issue about inflation, however measured, is its use as a policy tool. The popular economic narrative assumes that inflation is an outcome of economic activity. In reality, it is a key weapon in policy maker’s armoury. Throughout history, governments have used inflation to wipe out excessive debt, a practice that is now central to the policy of the Bernanke Fed to reduce systemic leverage.

http://www.nakedcapitalism.com/2011/04/satyajit-das-dead-hand-of-economics.html

evrything is through the roof today

http://video.foxbusiness.com/v/4634569/inflation-really-that-bad

USA has butter 19% above 2009
Pork up 5.5%

So if this is what gov't is saying you know the real price rise is much higher.

At Zabar's, Jarlsberg is currently $5.98/lb., and St. Andre $6.98/lb. It hasn't been this cheap in years. Not sure what the official US government prices for those are, though.

Betting that parents are less stingy when it comes to junior's needs, two of the country's biggest makers of diapers and wipes are pushing through price increases. Kimberly-Clark Corp. plans to raise prices on its Huggies diapers and wipes by 3% to 7% while Procter & Gamble Co. announced a 7% rise in prices for its Pampers diapers and 3% increase on wipes.

Shoppers are less likely to switch to a cheaper brand on a baby product than many other items on the shopping list, according to a recent survey by Sanford Bernstein analyst Ali Dibadj. Just 10% of consumers said they switched to a cheaper diaper brand because "it's not worth paying more in this category," and no consumers reported switching baby food. By comparison, nearly a third of consumers said they switched brands of bleach, bottled water and liquid soap.

Clorox Co., which reports next week, says it is raising the price of Glad trash bags by 9.5% beginning in May. The cost of some of its salad products, like Hidden Valley ranch dressing mix, will also rise.

http://online.wsj.com/article/SB10001424052748704132204576284701152615610.html

wheres the wage inflation?!

No wage inflation. Workers just get crushed. The idea that one can't have inflation without increases in wages is a fallacy.

Marco, The Fed actually produces a research report over ten years ago that debunked the tie in between inflation and wage growth. But the narrative of tying the two together works for the current Fed quite nicely thank you.

Q wheres the wage inflation?!
A https://www.clevelandfed.org/research/PolicyDis/pd1.PDF

There is little systematic evidence that wages (either conventionally measured by compensation
or adjusted through productivity and converted to unit labor costs) are helpful for
predicting inflation. In fact, there is more evidence that inflation helps predict wages. The
current emphasis on using changes in wage rates to forecast short-term inflation pressure
would therefore appear to be unwarranted. The policy conclusion to be drawn is that inflation
can appear regardless of recent wage trends.

time to switch to generic garbage bags from glad. just make sure the mil is the same or thicker and you'll be just fine.

http://www.youtube.com/watch?v=sIdBTrxBsBw

Rising prices, no wage inflation ... diminishing funds for housing (both buy & rent). Sell in 2007 or be locked in forever.

Food and shelter are important. Families will be squeezed. Expect lower savings, and less money spent on leisure, eating out and other non-essentials. Of course at the margin more people will be renters.

Did America not spend the Great Depression at the pictures?

You take a moralistic view as to what people on tight budgets "should" do. In reality, they cut back on essentials and splurge on opiates.

Rents will plummet if your price inflation w/o wage inflation scenario becomes real.

If people lose their jobs, I agree.
If they keep their jobs, it all depends on the extent of inflation.

My assumption is that if costs go up then wages will eventually follow, if not keep up. The basic idea is
that for the current scenario wages will not be leading, they will be following and probably slipping a bit at that.

Are you really this stupid or do you just desperately want to interact?

You talking to alanhart or Riversider?

You stupid

Me? I haven't even posted here.

Higher cotton prices and rising labour costs in China will leave US retailers facing wholesale clothes prices this year that are up to 15 per cent higher than those in 2010, according to Fitch.

The price rises, which will affect brands ranging from North Face to Levi’s, are signalling the end of a two-decade era in which clothing costs declined as western manufacturers shifted more production to low-cost emerging markets.

http://www.ft.com/cms/s/0/35ec8ccc-6f56-11e0-952c-00144feabdc0.html#axzz1KUDNMsW1

"A Record 49% Of Americans Pay Higher Rent Than They Can Afford"

"More and more renters are living beyond their means, according to Harvard's Joint Center For Housing Studies.

Back in 1960 only 24 percent of Americans spend over the recommended 30 percent of their income on rent. By 2000 that number increased to 38 percent. By 2009 that number increased to 49 percent.

Another 26 percent of Americans are severely burdened with rent over half of income.

Real income hasn't increased in thirty years, while rents rise and utility costs have recently soared:"

http://www.businessinsider.com/49-percent-of-us-renters-are-paying-more-than-they-can-afford-2011-4

This is not going to end well...

With diesel prices near their highest levels since 2008, the impact has started to appear in the first-quarter results of companies like Union Pacific railroad and the Arkansas Best Corporation, which has a trucking subsidiary. Some shippers said they expected to raise fuel surcharges.

The timing, some economists say, could not be worse. Consumers are already paying steeper prices at the gas pump and may see prices climb in stores if diesel prices remain high. American manufacturers, meanwhile, are struggling to get back on their feet.

“The manufacturing sector is hit disproportionately hard by higher diesel prices,” said Donald A. Norman, economist for the Manufacturers Alliance/MAPI, a public policy and economics research organization in Arlington, Va. “Simply to move all this stuff around, it is really hard to affect any cost savings. You have little in the way of alternatives.”

The question now is how long fuel prices will stay elevated and how much will be passed on to consumers, given the tenuous nature of the economic recovery.

“Any time there is a change in fuel prices, eventually that will sink through to the shipper and perhaps to the consumer,” said Pierce Myers, the executive vice president for the Parcel Shippers Association.

http://www.nytimes.com/2011/04/27/business/27surcharge.html?_r=1&adxnnl=1&pagewanted=2&adxnnlx=1303898484-bW6NIzMUVpZDBj3Sn/VHeg

The personal consumption expenditures price index rose at a 3.8 percent rate, its fastest pace since the third quarter of 2008, after increasing 1.7 percent in the fourth quarter.

http://www.reuters.com/article/2011/04/28/us-usa-economy-instant-idUSTRE73R3FF20110428

A sharp increase in oil over the past seven months has fueled a spike in wholesale prices. Wholesale costs have jumped an unadjusted 6.8% in the past year, the largest 12-month increase since September 2008.

Crude prices — the cost of raw materials — rose 4% in April, the government’s data showed

http://www.marketwatch.com/story/us-wholesale-prices-climb-08-in-april-2011-05-12-839230?reflink=MW_news_stmp

Import prices rising. It was cheap imports from China that in the past decade controlled inflation. This will not be repeated...

http://1.bp.blogspot.com/-dqotiyuVEec/TdJYN1umeYI/AAAAAAAAAWM/_DqTIXy1tQ8/s1600/FIGURE132.GIF

Of course a skeptic might argue this is in the government's interest if it lowers CPI(inflation)...
---------------------------------------------------------------

Scientists aiming their gene sequencers at commercial seafood are discovering rampant labeling fraud in supermarket coolers and restaurant tables: cheap fish is often substituted for expensive fillets, and overfished species are passed off as fish whose numbers are plentiful.

Yellowtail stands in for mahi-mahi. Nile perch is labeled as shark, and tilapia may be the Meryl Streep of seafood, capable of playing almost any role.

Recent studies by researchers in North America and Europe harnessing the new techniques have consistently found that 20 to 25 percent of the seafood products they check are fraudulently identified, fish geneticists say.

Labeling regulation means little if the “grouper” is really catfish or if gulf shrimp were spawned on a farm in Thailand.

Environmentalists, scientists and foodies are complaining that regulators are lax in policing seafood, and have been slow to adopt the latest scientific tools even though they are now readily available and easy to use.

“Customers buying fish have a right to know what the heck it is and where it’s from, but agencies like the F.D.A. are not taking this as seriously as they should,” said Michael Hirshfield, chief scientist of the nonprofit group Oceana, referring to the Food and Drug Administration.

http://www.nytimes.com/2011/05/27/science/earth/27fish.html

Does the bond market even care about inflation adjusted returns?
5 year treasury according to Bloomberg 1.72%
5 year TIPS 0.73%
CPI increase over 12 mos. 3.2%
Fed stated inflation target 2.0%

Basically the Fed keeps short term rates at zero which forces everyone to take some duration risk to get any yield which pushes down rates below any metric of asset or price inflation except perhaps the cost of buying a home.

Thomas Hoenig is right, the Fed needs to reverse course and raise interest rates to at least 1% and avoid the next problem or we'll be calling Bernanke, Greenspan II

I was reading a speech by NY Fed Gov (http://www.newyorkfed.org/newsevents/speeches/2011/dud110607.html) and it struck me how the Fed distorts definitions, so it can pretend to be fulfilling its role.

This is what Dudley wrote
For the Federal Reserve, pursuing the dual mandate of full employment and price stability allows us to make an important contribution to global stability and growth. Ensuring low and stable inflation preserves the purchasing power of the dollar and sustains its attractiveness as a medium of exchange.

Now this is from the Fed's website
http://www.federalreserve.gov/faqs/money_12848.htm

The Congress established two key objectives for monetary policy--maximum employment and stable prices--in the Federal Reserve Act. These objectives are sometimes referred to as the Federal Reserve's dual mandate.

This is where the lies start. Stable inflation means prices go up. Stable Prices mean something very different. The Oxford dictionary defines stable as " not likely to change or fail; firmly established"
---------------------------------------------------

FT writes that the U.S. is experiencing a mini-bout of stagflation and experiencing the most rapid rise in prices since 2006.

http://www.ft.com/intl/cms/s/0/a2e3d988-9748-11e0-9c9d-00144feab49a.html#axzz1PN6tCOuW

But in the 12 months to May, consumer prices rose 3.6 percent, the biggest jump since October 2008, and well above expectations for a 3.4 percent increase.

http://www.huffingtonpost.com/2011/06/15/inflation-in-may-rises_n_877300.html

Wow. Lower than St. Reagan's entire 8 year run.

Another thing we import from China....INFLATION
---------------------

The Chinese supply 78% of the footwear imported into the U.S.; 71% of the ties; 55% of the gloves; roughly 50% of dresses and baby clothing; and 90% of house slippers, according to Commerce Department data.

In contrast to the decades when a flow of Chinese workers from the countryside pushed factory labor costs down, China's workers now are demanding higher wages and better jobs.

U.S. import prices, excluding oil, rose 8% over the past two years, a historic shift from their downward drift for two decades. The increase is bigger still when including oil, which is up on global demand and Mideast turmoil.

http://online.wsj.com/article/SB10001424052702303499204576387774214424658.html

http://thehill.com/blogs/on-the-money/budget/170171-policymakers-take-a-look-at-inflation-change-in-debt-talks

How the government measures inflation may sound exceedingly wonky. But policymakers are taking a look in just that direction in their search for ways to roll back deficits – possibly to the tune of hundreds of billions of dollars.

As it stands, the government ties the consumer price index to the payout of entitlement benefits and individuals’ income tax bills, among other things. With that in mind, using a slower measure of inflation called the “chained” CPI could save the government billions of dollars on both the spending and revenue side.

Economists across the ideological spectrum have endorsed using chained CPI, saying it is a more accurate measure, as did President Obama’s own fiscal commission.

How gov't creates inflation....
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US ethanol refiners are consuming more domestic corn than livestock and poultry farmers for the first time, underscoring how a government-supported biofuels industry has contributed to surging grain demand.

http://www.ft.com/intl/cms/s/0/77dfcd98-ac9f-11e0-a2f3-00144feabdc0.html#axzz1RvwUZO1q

“We’re driving up food prices unnecessarily,” Ken Powell, chief executive of General Mills, said in an interview with the Financial Times. “If corn prices go up, wheat goes up. It’s all linked.”

http://www.ft.com/intl/cms/s/0/076dae94-aee9-11e0-9310-00144feabdc0.html#axzz1SRlvWc5g

"Senate Nears Debt Ceiling Consensus Which Demands Change In CPI Definition"

"The plan calls for changes to Social Security to move on a separate track, and establishes an elaborate procedure for considering the measures on the floor." And here is the kicker: "The $500 billion in cuts would come from a range of sources, including shifting to a new consumer price index to make cost-of-living adjustments to Social Security." Care to wager what the bulk of this $500 billion will come from: that's right - social security, whose deliverable obligations will plunge as suddenly the inflation variable in the actuarial calculation will very mysteriously be cut courtesy of Senate-endorsed theft. "

http://www.zerohedge.com/article/senate-nears-debt-ceiling-consensus-which-revolves-around-changing-cpi-definition

Does anyone envision the gov't calling for a change to CPI because they are concerned about under-reporting inflation?

“Consumers, particularly in the lower-income end, are being forced to use their credit cards for everyday spending like gas and food,” said Tavares, who’s based in Atlanta. “That’s because there’s been no other positive catalyst, like an increase in wages, to offset higher prices. It’s a cash-flow problem.”

After-tax income adjusted for inflation fell 0.1 percent from January through May, according to figures from the Commerce Department. The drop came as Labor Department data showed energy prices rose 8.2 percent and food climbed 2 percent during the same period.

http://www.bloomberg.com/news/2011-07-21/consumers-in-u-s-relying-on-credit-as-inflation-erodes-incomes.html

"Food Stamps Set Another Record High"

"About 15% of the U.S. population received food stamps in May, according to the Department of Agriculture. A total of 45.8 million people %u2014 a record high %u2014 used the government%u2019s Supplemental Nutrition Assistance Program (SNAP), up 12% from a year ago and 34% higher than two years ago."

http://wallstcheatsheet.com/breaking-news/food-stamps-set-another-record-high.html/

According to the F.T. profits got a boost from price increases and foreign exchange fluctuations. Their gain is your loss at the supermarket. Strip away these effects and the gains are much less than the reported 15%.

http://www.ft.com/intl/cms/s/0/19499f9a-bf58-11e0-898c-00144feabdc0.html#axzz1U963FL6z

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.5 percent in July on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 3.6 percent before seasonal adjustment.

http://www.bloomberg.com/news/2011-08-18/u-s-july-consumer-price-index-report-text-.html

"More Jobless Stagflation: CPI +0.5% On Expectations Of 0.2%, Jobless Claims Back Comfortably In +400K Territory"

"Core CPI however was in line with expectations at 0.2%. The reason for the surge? Gas, food and clothes. "The gasoline index rebounded from previous declines and rose sharply in July, accounting for about half of the seasonally adjusted increase in the all items index. The food at home index accelerated in July and also contributed to the increase, as dairy and fruit indexes posted notable increases and five of the six major grocery store food groups rose...The apparel index continued to rise sharply, increasing 1.2 percent in July; it has increased 3.9 percent over the past three months....The index for nonalcoholic beverages increased 0.9 percent in July as the coffee index continued to rise sharply." "

I need my double grande soy caramel salt iced latte, freaking now!!

http://www.zerohedge.com/news/more-jobless-stagflation-cpi-05-expectations-02-jobless-claims-back-comfortably-400k-territory

"And most frightening, the one year change in Americans receiving Emergency Compensation (EUC) has plunged from 4.7 Million to 3.1 Million. That's 1.6 million Americans who no longer even collect any benefits from the government."

$500psf?

Welcome to Supply-Side Economics, people!

ape buying real estate?

Wait for the hedgers to get a margin call bf 11am from their clearing house banks.

The final capitulation cometh. Wtf? Doubts me now? Flmaozzzz.

Till the buy on dips ninnies get flushed out, I no buy. :)

Talking ape... best show at the carnival.

MIT has inflation hitting 4%

http://www.zerohedge.com/news/annual-inflation-hits-4

MIT does NOT say the billion prices = inflation. They say it reflects inflation in GOODS. Services are 2/3 of the economy, which I have explained before time and again, and which you keep ingoring.

Jason - how many "services" does a wage earner that earns over $200k buy and how many "services" does a pensioner on a fixed income of $30K buy?

Would you agree that cheap services help the rich more than the poor and expensive basic necessity goods hurt the poor more than the rich? My hunch is that if you are in the top social tier that employs dog walkers, hair stylists, restaurants, taxis, etc, then all is relatively OK. If most of your salary goes to groceries, prescription drugs, shoes and clothes, etc, then it is a totally different story.

Please correct me if I am looking at this wrong. I think our difference is is that you think of this in some kind of "dollar" weighted delta (less aggregate dollar impact - the rich have more moeny and consequently spend more money) and I see it more as a "count" weighted delta (more aggregate people with negative impact, but less dollars).