All Posts Tagged With: "consumer price inflation"

We believe the “expansion” reported in the GDP figures is mostly counterfeit. It’s government spending and hot money filtering into the economy.

Much will be revealed this week in the Aussie market, although a lot will probably remain obscure too. Producer price data for the September quarter comes out from the Australian Bureau of Statistics. Inflation anyone? Maybe not in wages. But certainly in raw materials (energy).

Yesterday, both the Bank of England and the European Central Bank announced moves to boost the economy. They’re both falling in line behind Mr. Bernanke, who is “pulling out all the stops” in order to avoid a deep depression.

Did you see the first line of the minutes from the RBA’s June 3rd meeting? In case you missed it, here it is: “The Board’s discussion of the world economy commenced with a briefing on the outlook for Australia’s trading partners.” Why would a meeting on Australian interest rates begin with a discussion of foreign trading partners? Could it be that foreign demand for Aussie resources threatens higher inflation even more than Aussies hitting the shops with a credit card? Hold that thought.

We have given our opinion as to why consumer prices did not go up. We guessed, too, that those trends that labored so hard to hold them down have now walked off the job. Prices now seem to be adjusting to a higher money supply, with food up 4% last year, officially.

Our view is that higher consumer price inflation is in the pipes and will soon be backing up in the bathtub drains. Dorsch says the U.S. money supply is now increasing at a 16% rate; higher inflation can’t be far behind.

And what’s going on with retail sales? If consumers really were feeling the squeeze we think they ought to be feeling, they’d start spending less money right away. But the evidence is mixed. Some numbers show a big drop in consumer spending… others show consumers still opening their wallets.