U.S. June Consumer Prices Rise 0.2%; Core Rate Rises 0.3%

[swag]

http://www.bloomberg.com/apps/news?pid=20601087&sid=aikySnxtqt1U&refer=home

July 19 (Bloomberg) -- Consumer prices in the U.S. increased for a sixth straight month in June and costs excluding fuel and food rose more than forecast, suggesting Federal Reserve policy makers will keep raising interest rates.

Prices paid by Americans rose 0.2 percent after May's 0.4 percent increase, the Labor Department said in Washington. Excluding food and energy, so-called core prices rose 0.3 percent for a fourth straight month and exceeded the 0.2 percent median estimate in a Bloomberg News survey of economists.

Core prices increased 2.6 percent from June 2005, the biggest year-over-year rise since 2002, leaving inflation farther above the Fed's comfort zone. The report comes less than two hours before Fed Chairman Ben S. Bernanke presents his semi- annual economic report to Congress.

``Inflation pressures are picking up,'' Mike Moran, chief economist at Daiwa Securities America Inc. in New York, said before the report. ``Underlying conditions still carry inflation risk, with energy prices staying high and not much slack left in the economy.''

. . . more

[stop the bleeding]

1. the markets will react negatively today with this news

thank you

also there is other economic reports coming out today.

[Roland99]

2. I wouldn't be surprised to see a rise in the "oversold" markets today

;)

[stop the bleeding]

3. me either,

but you know how the market reacts to the impending doom and gloom of the FED and it's concern over inflation.

there are other reports that are coming out, like the crude inventories report which will make things go up or down.

on edit: the bid and ask on several of the ETF's that I can see before the market - have started to trade down, we will have to see if this holds throught the open and amature hour.

[Roland99]

9. Futures so bright, gotta wear shades

S&P 500 +2.80 1248.50
NASDAQ -3.50 1483.25
Dow Jones +11.00 10877.00

[CanonRay]

19. Does anybody know where I can find out what goods are in these statistics?

'Cause everything I buy sure as hell went up more than 0.2%!!! I'd really like to know what they use in it.

[swag]

13. I was looking for a down day for stock today too, but then came Bernanke

http://www.bloomberg.com/apps/news?pid=20601087&sid=a2EUTbJrYYus&refer=home

July 19 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke, laying the groundwork for a pause in interest-rate increases, said policy makers must be wary of lifting borrowing costs too far.

``We must take account of the possible future effects of previous policy actions -- that is, of policy effects still `in the pipeline,''' he said in the text of testimony to the Senate Banking Committee in Washington. ``The extent and timing of any additional firming that may be needed to address inflation risks will depend on the evolution of the outlook for both inflation and economic growth.''

Treasury notes rallied, stocks advanced and the dollar fell as traders interpreted his remarks as indicating the Fed is just about done lifting rates after two years of tightening. Investors still anticipate at least one more increase to prevent inflation from getting out of hand.

. . .

The testimony ``lists all the reasons why they would pause without saying they are going to,'' said Lou Crandall, chief economist at Wrightson-ICAP LLC in Jersey City, New Jersey. ``He is willing to let us go into the next meeting genuinely uncertain.''

. . . more

[MoseyWalker]

4. dumb question

why do they leave out food and energy? Doesn't that make the computations completely unreliable or invalid?

[stop the bleeding]

5. no such thing as a dumb question

just dumb answers, and this is something that I need to know as well, kicking for answer.

[Roland99]

6. They exclude those from the "Core" rate since their prices are volatile.

Just look at how gas prices can rise/fall over a few weeks.

A week ago here gas was $3.09-$3.19 and now it's down to $2.83 in some places.

[MoseyWalker]

7. Thanks!

Do they put them in for longer term figures, like yearly or quarterly?

[Roland99]

8. Here are some definitions (and a real-world analysis of those definitions)

http://www.clevelandfed.org/research/Inflation/US-Inflation/cpi.cfm


And then read this to see how today's current inflation numbers touted in the media are not the actual inflation values experienced by consumers:
http://www.shadowstats.com/cgi-bin/sgs/article/id=343

[MoseyWalker]

12. Both excellent links

and thanks again. I got a small questioning look when I read that the cost of baby and toddler clothing tends to be volotile.

From the second link

"The Boskin/Greenspan argument was that when steak got too expensive, the consumer would substitute hamburger for the steak, and that the inflation measure should reflect the costs tied to buying hamburger versus steak, instead of steak versus steak. Of course, replacing hamburger for steak in the calculations would reduce the inflation rate, but it represented the rate of inflation in terms of maintaining a declining standard of living. Cost of living was being replaced by the cost of survival. The old system told you how much you had to increase your income in order to keep buying steak. The new system promised you hamburger, and then dog food, perhaps, after that."

That paragraph explains a hell of a lot.

[Roland99]

14. Another "Benefit" to the "substitution" methodology.....

Allows the Fed to print up money and put it into the markets (via PPT/Faeries ;) ) and yet keep inflation "tame" as they've already artificially lowered the rate of inflation.

Can't let the public know what the REAL rate of inflation is...

[MaineDem]

10. Now, if only I could exclude food and energy from my household bills...

They take up a major part of everyone's budget. Seems silly to not include them in the government's figures.

I understand the reasoning but I still have to laugh at it. (And it's not a funny haha laugh.)

[Roland99]

11. The reason the food/clothing/etc. inflation rates are low are due to...

"substitution".

Some "wise" men decided, "Hey, if people buy generic brands over brand name items, they're saving money and not experiencing inflation".

How the hell that ever got beyond a brainstorming session is beyond me.

What happens when nothing left can be substituted?

What happens to those who don't substitute? Are they magically not experiencing inflation anymore?



:eyes:

[Iowa]

15. I'd like to see some large organization(s) with resources and clout...

...calculate an honest rate of inflation and announce it with great fanfare shortly after the government announces theirs. Perhaps the AFL-CIO, AARP, a group of universities with each handling a piece of it...

So much hinges on the CPI; wage raises, Social Security raises, SSDI/SSI raises, TIPS/I-Bonds interest. A few of us know what's going on, but most don't have a clue. The present process is a stealth, fraudulent way to turn the screws and lower our standard of living. The DOL, as an arm of the government, has a massive conflict of interest and should not be the entity calculating the official CPI.

[swag]

16. Just an additional note. Top-line CPI is up 4.3% over June 2005.

That is pretty savage erosion of the purchasing power of your dollar: it would cut in half a US citizen's purchasing power in 16.75 years if it continued at this rate.

[Blue-Jay]

17. K&R!!!111oneone

:D

[swag]

18. Franks.

U R teh r0XX0r!

Or sumpin'.