The Consumer Price Index Is Inflating Rapidly And The Fed Is Ignoring It

The Fed ignores food and energy and seems mostly focused on final pricing.  Apparently big increases in both price paid and price received in manufacturing surveys such as the Richmond are still being “monitored.”


MIT has a daily price survey of 550,000 products from 53 stores to track this.  After erasing the “deflation” of the 2008-2009 economic crisis, this index has been grinding gradually higher since late 2009. There is now a much more pronounced upslope to it from about 99.80 in in early October to 100.54 yesterday.  This index has closely tracked the CPI, until recently, and suggests the October CPI was grossly understated.


China is now gridlocked with [].  With the huge increase in input prices and global food inflation, I can’t imagine that Chinese or Asian exporters are in any position to profit from selling goods to the US, short of substantial price increases.  I addressed this in my post, Chinese Exporters Cope.  Indeed, it looks like this take or leave approach is now on the table:

  • -Gap Inc., J.C. Penney Co. and other U.S. retailers may have to pay Chinese suppliers as much as 30 per cent more for clothes as surging cotton prices boost costs.
  • -Some manufacturers aren’t taking orders for next year because of fluctuating cotton prices, J.C. Penney Chief Executive Officer Myron Ullman said Nov. 12.
  • -“We can give clients a price now, but it will only be valid for a week,” said Tianlong’s Hu.

There are definite signs that the Chinese supply chain to the US is already under severe pressure. The normal seasonal drop from August to early February (ex-2008-09 crisis) is about 30%. This can be tracked by the Shanghai container index to the US West Coast which is already down 28% WITH TWO AND A HALF MONTHS TO GO.


Join me and Lee Adler as we discuss this and other developments at Radio Free Wall Street. New podcast to be posted Wednesday night.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.