The U.S. Import Price Index advanced 1.8 percent in October, the Bureau of Labor Statistics of the U.S. Department of Labor reported today, led by a 6.9 percent rise in petroleum prices. The increase followed a 0.8 percent advance in September. Prices for U.S. exports rose 0.9 percent in October after a 0.3 percent increase the previous month.
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The 1.8 percent rise in import prices in October was the largest monthly increase since a similar change in May 2006. The advance followed a 0.8 percent rise in September as the increase during the past two months continued the upward trend over most of 2007 after a 0.4 percent downturn in August. The 6.9 percent increase in petroleum prices was the largest contributor to the October increase, although nonpetroleum prices also advanced, rising 0.5 percent. Petroleum prices continued an upward trend over the past year, rising 41.4 percent for the 12 months ended in October. The increase in nonpetroleum prices in October followed a 0.2 percent decline in September. Nonpetroleum prices advanced 3.2 percent over the past year while the price index for overall imports rose 9.6 percent for the same period.
Here's how the Federal Reserve reads this statement:
The U.S. Import Price Index advanced 1.8 percent in October, the Bureau of Labor Statistics of the U.S. Department of Labor reported today,led by a 6.9 percent rise in petroleum prices.The increase followed a 0.8 percent advance in September. Prices for U.S. exports rose 0.9 percent in October after a 0.3 percent increase the previous month.
....
The 1.8 percent rise in import prices in October was the largest monthly increase since a similar change in May 2006. The advance followed a 0.8 percent rise in September as the increase during the past two months continued the upward trend over most of 2007 after a 0.4 percent downturn in August.The 6.9 percent increase in petroleum prices was the largest contributor to the October increase,although nonpetroleum prices also advanced, rising 0.5 percent.Petroleum prices continued an upward trend over the past year, rising 41.4 percent for the 12 months ended in October.The increase in nonpetroleum prices in October followed a 0.2 percent decline in September. Nonpetroleum prices advanced 3.2 percent over the past year while the price index for overall imports rose 9.6 percent for the same period.
Wasn't that easy? All of the bad news is gone.
4 comments:
This index shows a 9.6% YoY increase in import prices. If the PPI shows a similar move this month compared with last month, PPI will be over 8% YoY. CPI will probably follow being between 3.5%-4.0% YoY.
This will be bad for the stock market, and together with retail turning negative in real terms in October, will strongly signal imminent recession. The only shoe not to drop at that point will be jobless claims and long term interest rates.
Sorry if this has been discussed before, but I think you are missing the forest for the trees here.
Bernanke is trying to walk a tightrope between a recession and inflation (with the possiblity of both happening becoming more likely). His actions suggest that he would rather err towards "no recession", even though inflation fighting is the Fed's primary duty. I suspect he is doing that in order to increase the likelihood of Bush being succeeded by another Republican administration, either due to his own policy preferences or to increase the chance he gets re-appointed? Plausible?
Dantheman
"His actions suggest that he would rather err towards "no recession", even though inflation fighting is the Fed's primary duty."
His actions would better be suggested by his speech in Fed speech in 2002 where he stated the Fed could turn on the printing presses rather than have deflation.
No. The Fed is talking up inflation just Paulson is talking a strong dollar.
Neither can be taken seriously.
Why are retailers having early 50% Christmas sales already?
Because we're (consumers) sending more of our cash to OPEC, so retailers have to discount merchandise to move it off the shelves.
Slashing prices is not a symptom of inflation.
With GDP moving around 1-2%, and inflation around 3%, the Fed can cut rates.
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