Friday, July 22, 2011

MIT's BPP Monthly Inflation Falls to .10% in June

The Billion Prices Project @ MIT has just been updated with daily price data through June 30, and is reflecting significantly moderating inflationary pressures through last month.  The chart above shows monthly inflation rates over the last year, and inflation for the month ending June 22 hit the lowest rate all year, before turning up slightly towards the end of the month.  

Inflation for the month ending June 22 was only about 0.10% (1.20% at an annual rate), compared to a peak of more than 0.80% earlier this year. For the month ending June 30, inflation was still only about 0.20% (2.40% annually). Unless the recent upward month-end trend continues to accelerate significantly, it would really hard to make a strong case for rising inflationary pressures based on the new BPP daily price data.  The deceleration in monthly inflation from more than 0.80% in February to 0.10% in June makes a stronger case for deflationary pressures than inflationary pressures.   

Update: According to MIT about its methodology on daily prices, "Our data are collected every day from online retailers using a software that scans the underlying code in public webpages and stores the relevant price information in a database. The resulting dataset contains daily prices on the full array of products sold by these retailers. Our data include information on product descriptions, package sizes, brands, special characteristics (e.g. “organic”), and whether the item is on sale or price control."


At 7/22/2011 5:04 PM, Blogger stereolambda said...

This comment has been removed by the author.

At 7/22/2011 5:04 PM, Blogger stereolambda said...

Does this metric include food and energy?

At 7/22/2011 5:06 PM, Blogger Mark J. Perry said...

There's a link in the post to the MIT-BPP website, and you can find information there about how the price index is constructed.

At 7/22/2011 5:08 PM, Blogger Benjamin Cole said...

Inflation! Hooo!
The Chicken Inflation Littles are hysterical about inflation! The world is ending--inflation is up over 2 percent! Oh no!!

Ray Dalio, world's largest hedge fund manager, says we can have economic rot for 10 years as we slowly, slowly, slowly, deleverage, or we can print money have moderate inflation, and quickly deleverage through growth and inflation.

So, is ultra low inflation owrth 10 years of economic rot?

I say print the effing money.

10 years of economic rot is not worth it, just so some anal gnome-bean-counters at the Fed can pettifog about the low inflation they are maintaining.

At 7/22/2011 6:00 PM, Blogger Rufus II said...

A little inflation is the absolutely, most minor or our worries. Unemployment is 9.2%, and Rising. Add in those that have given up (and, are, thus, not being counted,) those that are working part-time (because they can't find full-time employment,) etc., and Heaven Only Knows what the number is.

Our Trade Deficit last month was $50 Billion, and our average Fiscal Budget is running a bit over $100 b/mo.

Our Corporations are sitting on a couple of $Trillion, locked up overseas, and 47 Million Americans are on Food Assistance.

We are Dead. In. The. Water.

The Politicians have no answers, and even Bernanke admits he's lost in the hand.

At 7/22/2011 6:02 PM, Blogger Craig Howard said...

we can have economic rot for 10 years as we slowly, slowly, slowly, deleverage, or we can print money have moderate inflation, and quickly deleverage through growth and inflation.

You write that as if those were the only choices. We, also, might get rid of the current administration, end the threats of higher taxes, higher health care costs and higher environmental regulation. We could call it the "third way".

At 7/22/2011 6:07 PM, Blogger Rufus II said...

Safeway, and Family Dollar Store came out, today, and reiterated Walmart's observation that the last week of the month the stores are empty.

Let me give the Brainiacs a hint.

There was over a 125 Day Supply of Pickup Trucks on Dealers' Lots last week.

The Ford Focus, and the Chevy Cruze are virtually Sold Out.

At 7/22/2011 6:41 PM, Blogger Nick said...

Still, inflation is “going to be serious,” Wal-Mart U.S. CEO Bill Simon said during a meeting with USA TODAY’s editorial board. “We’re seeing cost increases starting to come through at a pretty rapid rate.”

At 7/22/2011 6:53 PM, Blogger Rufus II said...

Well, we've been jawboning China into raising the value of the Yuan. In the last year it's moved from about 6.83 to the Dollar to 6.46, or so.

So, that would be about a 5% increase in the cost of their Chinese-made products. The Dollar has also lost value against most (all?) other "exporting" currencies.

Shipping costs, of course, are rising rapidly (except for those products they have managed to move from truck to rail, of course.)

At 7/22/2011 7:00 PM, Blogger Benjamin Cole said...


I am in favor of cutting federal outlays and revenues to 16 percent of GDP, through entitlement trims and large reductions in military outlays. Wipe out the USDA, privatize the VA.

Everyone is for the least regulation possible.

At 7/22/2011 8:33 PM, Blogger Che is dead said...

'I am in favor of cutting federal outlays and revenues to 16 percent of GDP ..."

Complete bullshit. You have been a consistent supporter of everything that Obama and the Dems have done, supporting every policy, including Obamacare, which has resulted in an increase of federal spending to more than 24 percent of GDP.

At 7/22/2011 10:22 PM, Blogger arbitrage789 said...

From the consumer standpoint, the “Billion Prices Project” data is of interest.

But an investor has to try to figure out what the economic data is going to look like 6 months (or more) in the future.

I think that gold, Australian dollars, and numerous food and energy commodities will continue to far outpace core CPI.

At 7/23/2011 10:33 AM, Blogger morganovich said...


so 3.8% year on year core inflation is low?

you have clearly not looked at this data.

look at the annual number which is at multi year highs and climbing.

you seriously need an economics education.

At 7/23/2011 2:08 PM, Blogger Benjamin Cole said...

Che is Dead:

Obviously, you ahve not been reading my posts.

I support going to a japan-style health care system, that consumes 4 percent of GDP. A radical reduction in military-VA-homeland security outlays. Raising the SS retirement age to 67, same on medicare. Euthanisia for older Medicare patients. Wiping out the USDA.

The fact that I regard the GOP as a corrupt confederacy of jackanapes, grifters and strumpets does not make me a big spender.

At 7/23/2011 3:02 PM, Blogger Ron H. said...

"Obviously, you ahve not been reading my posts."

I read them the first four times you posted them. Have you changed something?

At 7/23/2011 8:51 PM, Blogger morganovich said...

for some reason, every time i post the link to the BPP and point out that this is a seasonal issue, not one of overall inflation, they fail to post.

annual BPP is showing a multi year high and is nearly 4%.

monthly inflation cools off every summer.

quoting the 30 day number is very misleading.

we are experiencing the highest BPP inflation year on year we have seen yet.

far from abating, inflation is accelerating.

and BPP is better compared to "core" than overall CPI.

in fact, it's likely to read lower than "core" should as it lacks education and healthcare and vastly overweights things like consumer electronics.


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