Inflation Accelerated Last Month On Higher Prices for Energy

Wall Street Journal ^ | December 14, 2007 8:35 a.m | BRIAN BLACKSTONE

[shrinkermd]

The consumer price index jumped 0.8% in November, the Labor Department said Friday, up sharply from October's 0.3% rise and the biggest increase since September 2005. The core CPI, which excludes volatile food and energy prices, advanced 0.3%, it biggest rise since January.

Consumer prices were up 4.3% from a year ago, matching the highest rate since September 2005. The core CPI was up 2.3% compared to the same month a year ago, up from 2.2% in October. That's the first increase in annual core inflation since January

[2banana]

With inflation - the FED can not cut anymore. Hello recession in 2008...

[Designer]

"The core CPI was up...That's the first increase in annual core inflation.."

So it's (WSJ) official?

We are now supposed to define inflation as the Consumer Price Index?

Just wait until the CPI catches up with inflation!

[dangus]

>> With inflation - the FED can not cut anymore. <<

That was the idiotic thought process that brought us the 1992 recession. The report clearly stated that OIL was the largest cause of the inflation. An increase in the scarcity of a natural resource is NOT the kind of inflation that causes recessions, unless that resource were so scarce and it supply so inflexible as to absolutely prevent consumption.

Last quarter, the GDP grew 4.9%, despite a 20% collapse in the housing industry. Even so, the GDP UNDER-PERFORMED the productivity surge.

[Cap Huff]

Let’s not bring in any other factors when we’re having a nice recession party. Maybe we can juice it up into being a full fledged depression! Won’t it be fun living in one of those shanty towns? Maybe we can get to bum the rails too. Gin up the CCC and the WPA . . . Pretty soon we’re all singing, “happy days are here again . . . “

Seriously, there are economic challenges in the road ahead, but I doubt that they are nearly as apocalyptic as some seem to be hoping.

[biff]

Thanks Ben, I am sure we can look forward for more inflationary efforts from you in the future.

[Clemenza]

Break out the polyester and the Ronnie Milsap! Put up your Farah and Burt Reynolds posters! Get the Transam with the Firebird logo, INFLATION IS BACK!

[rb22982]

Unless you think barrel of oil is headed to $125-150, your top line (not core that excludes food & energy) should not have anymore big increases.

[2banana]

That was the idiotic thought process that brought us the 1992 recession. The report clearly stated that OIL was the largest cause of the inflation. An increase in the scarcity of a natural resource is NOT the kind of inflation that causes recessions, unless that resource were so scarce and it supply so inflexible as to absolutely prevent consumption.

Last quarter, the GDP grew 4.9%, despite a 20% collapse in the housing industry. Even so, the GDP UNDER-PERFORMED the productivity surge

Hmmmm...your logic would indicate the FEd should raise rates...

[Notary Sojac]

Beat me to the post. If the fundamentals of the economy are strong and the mortgage problems are "contained", then there is no need to cut rates or bail out borrowers.

There are a lot of people on FR who follow what I call the "Kudlow line" which amounts basically to "The economy is in great shape! And if we don't do something to help out Wall Street, it's going to get even worse!!!"

[jiggyboy]

Careful, they can sniff out posts like yours from miles away. Prepare for a lot of posts calling you gullible, challenging your intelligence, asking for a lot of arcane data to back up your post which is either completely ignored or willfully misinterpreted, and economic opinions that remind you of those shows where five-year-olds explain how to make a cake.

[jiggyboy]

Hmmmm...your logic would indicate the FEd should raise rates...

If we assume that Wednesday's stock market reaction verdict is correct -- that infinite liquidity ain't gonna help and everybody knows it -- then lowering interest rates to zero won't help. (It's not a liquidity problem at this point, it's a solvency problem.)

So that by itself doesn't mean that the Fed should raise rates, but it does mean that further lowering rates is the least likely option going forward.

Note that a corollary of this theory is that the dollar will strengthen against other currencies which itself leads to lower prices to gold and silver. And this is exactly what has happened in the past couple of days.

[Notary Sojac]

“The subprime problem is contained” will be listed in future dictionaries of quotations right next to “I did not have sex with that woman”.

[dangus]

No, if the productivity growth is higher than the remainder of GDP minus workforce growth, then that means that the economy is growing more slowly than it should. You lower rates to boost the GDP. You raise them when productivity growth isn’t strong enough to support economic growth.