Sunday, December 04, 2011

BPP Data Shows Inflation Trending Downward

The chart above shows monthly inflation rate from the Billion Prices Project @ MIT over the period from the first of the year through October 31.  According to the BPP website, the index is "designed to provide real-time information on major inflation trends, not to forecast official inflation announcements. We are constantly adding new categories of goods, but we do not cover 100% of CPI goods and services. The price of services, in particular, are not easy to find online and therefore are not included in our statistics."

Bottom Line: Monthly inflation, measured by the BBP @ MIT, has been trending downward since February, and at the end of October was below 0.10%.    

16 Comments:

At 12/04/2011 11:46 AM, Blogger PeakTrader said...

Real growth is also trending downward:

Report: Europe's economy on verge of recession
November 10, 2011

Europe is dangerously close to falling into another recession as economic growth has all but come to a standstill, the European Union said Thursday.

Recovery in the 27-member European Union -- the world's largest economy -- has stopped and is expected to stagnate until well into 2012, according to official forecasts from the EU's European Commission.

The Commission expects gross domestic product in the EU to expand at just 0.5 percent for all of 2012...Unemployment in the EU is projected to remain at 9.5 percent.

Weakness in the EU...could also accelerate to form a vicious downward spiral, the Commission warned.

 
At 12/04/2011 12:02 PM, Blogger PeakTrader said...

Morgan Stanley slashes 2012 global growth forecast to 3.5%
Nov 28, 2011

"Our economics team in Europe now expects a recession in Europe while the US economy is expected to continue growing below its trend," said Morgan Stanley.

Morgan Stanley isn't alone in its bearish view. Goldman Sachs warned on Friday that Europe's public sector funding problems were starting to spill over into household and corporate credit.

******

Global Growth Forecasts Cut by Citigroup, UBS on Europe Slump
November 29, 2011

Citigroup reduced its 2012 prediction for global expansion by 0.3 percentage points to 2.5 percent...UBS now predicts 2.7 percent growth next year instead of 3.1 percent.

 
At 12/04/2011 1:08 PM, Blogger Buddy R Pacifico said...

What does the McKinsey Global Institute have to say about resource(food, ag raw materials, energy and metals) prices?

""Our analysis suggests they will remain high and volatile for at least the next 20 years if current trends hold."

What Trend?

"... a world that will see three billion people join the middle classes over the next two decades...

 
At 12/04/2011 1:15 PM, Blogger PeakTrader said...

Will the U.S. output gap improve or worsen in 2012?

Chart:

http://www.economonitor.com/dolanecon/files/2011/11/P111124-5a.png

 
At 12/04/2011 1:25 PM, Blogger Benjamin said...

Fraud! Deception! The Chicken Inflation Littles will squawk to the skies, that the only thing that counts in this whole world in inflation, and inflation is soaring wildly out of control.

We need to genuflect to gold, humbly, miserably, even if doing so suffocates the economy repeatedly.

Cluck, cluck, cluck, cluck, cluck.

 
At 12/04/2011 2:40 PM, Blogger morganovich said...

mark-

i think you are consistently using this data in a misleading way.

you are identifying a seasonal pattern.

looked at on an annual basis (vs a year ago) there may be a very slight downtrend, but it's still reading 3.7%, barely off the highs.

http://bpp.mit.edu/usa/

inflation is generally discussed on a year over year precisely to avoid these consistent seasonal patterns, a fact of which i have little doubt you are aware.

so why the constant focus on such a misleading presentation?

at the very least, you ought to include the annual (and perhaps daily) figures. focusing on the one chart with the shape you like seems a bit manipulative.

also note that the BPP is always going to understate inflation as it ignores the big factor of food, energy, healthcare, education etc. and focuses only on online prices, the most competitive in the world and the ones that most overemphasize consumer electronics.

based on composition, you would expect BPP to read under CPI core.

so if core is over 3.7%, given what food and fuel are doing, you'd expect a headline figure of more like 7-8%.

 
At 12/04/2011 2:54 PM, Blogger Benjamin said...

And Morgan, true to form, has come to cluck.

Tell me Morgan, you have been clucking about 7 percent to 10 percent inflation for years. Do you really believe living costs are up 30 percent from four years ago?

Housing? Cars? Medical care? Lawyers fees?

If what you say is true, then our living standards have fallen far below that of Europe. Our standard of living is being overestimated by 30 percent or more.

Given what i see on Rick Steves' travel show, it may be true that Euros live better than we do. Sure looks like it.

 
At 12/04/2011 5:03 PM, Blogger juandos said...

pseudo benny when are you ever going to grab a clue from reality?

Ask someone to read and interpet the graphs for you...

Well if the site UsInflationCalculator.com is correct then the inflation rate has gone down slightly since May...

ShadowStats has a somewhat grimmer picture...

 
At 12/04/2011 6:32 PM, Blogger PeakTrader said...

It seems, we're either heading into stagflation or a double-dip, because the annualized core inflation rate is 2.1%, which exceeds the Fed's 2.0% upper limit, while the economy is underproducing by $1 trillion a year, and with $1 1/2 trillion annual budget deficits.

 
At 12/04/2011 7:39 PM, Blogger Benjamin said...

Of all the stupid targets in the world, the Fed's two percent target is the stupidest.

From 192 to 2008, the USA enjoyed many, many years of prosperity and growth. Inflation ranged from 1.6 to 5.4, usually in the 3 to 4 percent range.

Obviously, good growth is compatible with moderate and varying inflation.

So now we want to suffocate ourselves at 2 percent?

For what?

 
At 12/04/2011 7:56 PM, Blogger morganovich said...

bunny, and once more you are here to demonstrate what a dolt you are by making animal noises and being unable to speak to the substance of the conversation.

look at your bills dolt.

my food bills are up 30% in the last 4 years. energy, yup. healthcare, yup. rents in major cites are up easily that much (and remember that that is the big mover for housing as they change rapidly and affect many while home prices affect few and those who already own a home have a depreciating currency.

the commodities index is up 162% in the last 10 years. that's 10.1% a year. but "inflation" has magically been 2-3%. yeah, right.

prices of imports and exports are both up double digits but the economy as a whole is running at 3.7%, not likely.

know a lot of people who feel better off in real terms that they were in 2000? i doubt it.

the EU measures inflation the same way we do as well dufus, so your comparison is meaningless, which makes it the same as every other inflation argument you have ever made.

going to trot out unit labor again and need an explanation of how that is circular?

"Of all the stupid targets in the world, the Fed's two percent target is the stupidest."

of all the stupid commentators on economic bunny, you are the stupidest.

2%? what's 2%? inflation even using CPI is running at nearly twice that and will spike for the november reading as energy soared.

buy those bonds and let your capital erode if you like, but your desire to see our currency debased is absurd. it serves no purpose. us savings rates are already too low and you want to drop them? you are trying to cure a hangover with amphetamines and wondering why the long run effects seems bad.

 
At 12/05/2011 2:10 AM, Blogger PeakTrader said...

Let's see, my housing payment is the same, auto payment the same, insurance payments the same, AT&T bill the same, medical & dental co-payments the same, I bought food, some of it was 50% off, bought gasoline that was cheaper than a year ago, and bought some clothes not long ago, which was a great bargain.

No inflation here, for years, although some prices went up and down.

 
At 12/05/2011 4:17 AM, Blogger juandos said...

"...AT&T bill the same, medical & dental co-payments the same, I bought food, some of it was 50% off, bought gasoline that was cheaper than a year ago, and bought some clothes not long ago, which was a great bargain"...

Where are you living PT, Never Never land?

 
At 12/05/2011 8:18 AM, Blogger VangelV said...

so if core is over 3.7%, given what food and fuel are doing, you'd expect a headline figure of more like 7-8%.

Mark seems to have something about themes. He picks a narrative that he wants to nurture and chooses any event or data point that supports it while ignoring the evidence that argues against it.

 
At 12/05/2011 8:37 AM, Blogger Johnny Bee Dawg said...

"...AT&T bill the same, medical & dental co-payments the same, I bought food, some of it was 50% off, bought gasoline that was cheaper than a year ago, and bought some clothes not long ago, which was a great bargain"...

This is exactly what I am experiencing, except I eliminated my $90 per month AT&T bill completely and use the free minutes and long distance from my cellular contract. Also refinancing my house saved me $400 a month. My income is UP from 4 years ago, while my expenses have actually dropped.

There are constant deals at the grocery store. General Mills cereal was on sale $2 a box 3 weeks ago. We still havent finished it all yet. Pork shoulder was 99 cents a pound 2 weeks ago, while Prime Rib Eye Steak was only $13 a pound last nite. (While beef futures zoomed around, I was buying Prime last nite on special at less than I can remember in YEARS. In fact, 5 years ago, I couldnt even buy prime at a grocery store in my town.) We spend no more than 4 years ago, or even one year ago, and have more choices and better food.

FYI, Subway has $2 subs all month. Jos Bank Clothiers has buy 1 get 3 free on everything. Clothing is practically free when you buy on sale these days.

 
At 12/05/2011 1:13 PM, Blogger Walt G. said...

My personal CPI is +6.71% from January 1 to date over last year. This is led by diesel fuel going from $3.24 to $4.05 per gallon (+25%) and our weekly grocery bill going from $130 to $170 per week (+31%). Neither of these two items has differed in quantity and I have not subtituted them substantially enough to count from last year, but I think my truck is getting parked next year.

 

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