Inflation soars 1.2% as CPI rises

[zendari]

Originally posted by: Engineer
CPI up .6% in April. Core up .3%. Core rate might push Fed into more rate hikes.

So far this year, consumer prices are rising at an annual rate of 5.1 percent, much faster than the 3.4 percent increase registered for all of 2005. Core prices are advancing at a brisk 3 percent pace, compared with a more moderate 2.2 percent rise for last year.

5.1% is outpacing wages by a long shot. If this keeps going, looks like another year with "REAL" wage declines in the US, well, at least for the middle class folks and possibly poor too.

Not so much. From a long term perspective, wages have risen greatly relative to prices, as goods once considered luxurious became commonplace even for the very poor.

Only in the US can the very poor acquire welfare for cable TV.

 

[Engineer]

Originally posted by: zendari

Originally posted by: Engineer
CPI up .6% in April. Core up .3%. Core rate might push Fed into more rate hikes.

So far this year, consumer prices are rising at an annual rate of 5.1 percent, much faster than the 3.4 percent increase registered for all of 2005. Core prices are advancing at a brisk 3 percent pace, compared with a more moderate 2.2 percent rise for last year.

5.1% is outpacing wages by a long shot. If this keeps going, looks like another year with "REAL" wage declines in the US, well, at least for the middle class folks and possibly poor too.

Not so much. From a long term perspective, wages have risen greatly relative to prices, as goods once considered luxurious became commonplace even for the very poor.

Only in the US can the very poor acquire welfare for cable TV.

So you have proof that the CPI numbers that have outpaced wages are now including the luxurious items you state? Links please?

Show me how wages have risen faster than the price of food? How about a car? How about housing? How about energy prices? I'm waiting to be convinced (sincerely).

Thanks.

 

[dmcowen674]

Originally posted by: Engineer

Originally posted by: zendari

Originally posted by: Engineer
CPI up .6% in April. Core up .3%. Core rate might push Fed into more rate hikes.

So far this year, consumer prices are rising at an annual rate of 5.1 percent, much faster than the 3.4 percent increase registered for all of 2005. Core prices are advancing at a brisk 3 percent pace, compared with a more moderate 2.2 percent rise for last year.

5.1% is outpacing wages by a long shot. If this keeps going, looks like another year with "REAL" wage declines in the US, well, at least for the middle class folks and possibly poor too.

Not so much. From a long term perspective, wages have risen greatly relative to prices, as goods once considered luxurious became commonplace even for the very poor.

Only in the US can the very poor acquire welfare for cable TV.

So you have proof that the CPI numbers that have outpaced wages are now including the luxurious items you state? Links please?

Show me how wages have risen faster than the price of food? How about a car? How about housing? How about energy prices? I'm waiting to be convinced (sincerely).

Thanks.

Don't hold your breath.

Besides you're old, he wants you to die.

 

[zendari]

Originally posted by: Engineer

Originally posted by: zendari

Originally posted by: Engineer
CPI up .6% in April. Core up .3%. Core rate might push Fed into more rate hikes.

So far this year, consumer prices are rising at an annual rate of 5.1 percent, much faster than the 3.4 percent increase registered for all of 2005. Core prices are advancing at a brisk 3 percent pace, compared with a more moderate 2.2 percent rise for last year.

5.1% is outpacing wages by a long shot. If this keeps going, looks like another year with "REAL" wage declines in the US, well, at least for the middle class folks and possibly poor too.

Not so much. From a long term perspective, wages have risen greatly relative to prices, as goods once considered luxurious became commonplace even for the very poor.

Only in the US can the very poor acquire welfare for cable TV.

So you have proof that the CPI numbers that have outpaced wages are now including the luxurious items you state? Links please?

Show me how wages have risen faster than the price of food? How about a car? How about housing? How about energy prices? I'm waiting to be convinced (sincerely).

Thanks.

It's only in the last few quarters which inflation has outpaced worker compensation, and it is unfortunate. For much of the Bush presidency the opposite was true.

Text

Core inflation still remains quite low, at .1% or so I believe. And wage growth is still reasonable.

 

[Engineer]

Originally posted by: zendari
Core inflation still remains quite low, at .1% or so I believe. And wage growth is still reasonable.

Core inflation was .3 and an annualized rate of 3%. However, you might live off of core inflation without food and energy. Most of us have a problem with that.

Of course, reasonble to you means lower and lower and lower, especially if profits and company incomes are rising at higher and higher multiples of those wage increase. Also might add that that CEO wage increases are also "reasonable" in your eyes compared to the paling wages of America's middle class.

 

[zendari]

Originally posted by: Engineer

Originally posted by: zendari
Core inflation still remains quite low, at .1% or so I believe. And wage growth is still reasonable.

Core inflation was .3 and an annualized rate of 3%. However, you might live off of core inflation without food and energy. Most of us have a problem with that.

Of course, reasonble to you means lower and lower and lower, especially if profits and company incomes are rising at higher and higher multiples of those wage increase. Also might add that that CEO wage increases are also "reasonable" in your eyes compared to the paling wages of America's middle class.

I do agree it hasn't been a great trent for the past couple quarters.

But increased prices includes the increased price of healthcare which is factored into worker compensation.

 

[RightIsWrong]

Originally posted by: zendari

Originally posted by: Engineer

Originally posted by: zendari
Core inflation still remains quite low, at .1% or so I believe. And wage growth is still reasonable.

Core inflation was .3 and an annualized rate of 3%. However, you might live off of core inflation without food and energy. Most of us have a problem with that.

Of course, reasonble to you means lower and lower and lower, especially if profits and company incomes are rising at higher and higher multiples of those wage increase. Also might add that that CEO wage increases are also "reasonable" in your eyes compared to the paling wages of America's middle class.

I do agree it hasn't been a great trent for the past couple quarters.

But increased prices includes the increased price of healthcare which is factored into worker compensation.

I think that you are not realizing that most employers are no longer providing healthcare anymore. At least not at the levels that they used to. Now, a good bit of them have switched over from company provided to company assisted plans where the employee is paying a bigger and bigger percentage of the costs for it. Factor in that deductables are rising and the coverage is shrinking......

I hope that you see the trend.

Survey and methodology

A key tactic employers used to lower their 2005 cost increase was again cost-shifting. While the average employee contribution as a percent of premium was essentially unchanged, employers increased employee cost-sharing at the point of service. An individual deductible for in-network care is now required in 80% of PPO plans, up from 73% last year. Among large employers (500 or more employees) the median deductible amount rose from US$250 to US$300. The median small-employer deductible did not change, but the percentage of small employers requiring a deductible of US$1,000 or more reached 34%, up from 31% in 2004. Fewer large employers require a deductible of this size (9%), but their number is growing as well.

The use of coinsurance as a means of sharing the cost of office visits increased, from 5% to 9% of all PPO sponsors and from 18% to 22% of all large sponsors. Among jumbo employers (20,000 or more employees), the use of coinsurance jumped from 26% to 37%. This is a significant departure from the recent past, in which PPOs moved to copays to compete more effectively with HMOs for enrollment. Coinsurance reflects the actual cost of the service provided and thus is seen as a consumerist strategy. It also tends to shift more cost to employees than copays do.

 

[zendari]

Actually, if anything, employer compensation in the healthcare field has increased.

Text

Their spending increased 9.2% in 2005. It's not shrinking; the overall price of healthcare is increasing at a faster rate relative to employer contributions and the consumer is making up a larger difference.

This 9.2% is why worker compensation is well on the rise even if real wages are stagnant.

 

[techs]

Originally posted by: zendari
Actually, if anything, employer compensation in the healthcare field has increased.

Text

Their spending increased 9.2% in 2005. It's not shrinking; the overall price of healthcare is increasing at a faster rate relative to employer contributions and the consumer is making up a larger difference.

This 9.2% is why worker compensation is well on the rise even if real wages are stagnant.

Once again you have reached a wrong conclusion.
So many people don't have any employer paid or assisted health care that there are relavtively fewer companies that are increasing their health care contributions. And if the companies that have health care are not increasing their contributions by, say, 4 percent this year to keep up with inflation than they are actually decreasing their compensation in terms of real wages.
And all the traditional measures of "real wages" include health care contributions so your wacky idea that somehow workers are really increasing their real wages is just that, wacky.

 

[RMich]

Originally posted by: Saijin
I'm just curious, is there a way to hedge ourselves against inflation? ie. investments, saving, buying a house possibly?

The general strategy in inflationary times is to borrow money to purchase tangible goods. What the Germans, during their hyperinflation, called "Sachewerte." For example, take out a mortgage (fixed rate) and buy a house. Precious metals (and things like stock in gold mining companies) have also historically been a good inflation hedge. Other tangible stores of value, such as art, stamps (rare ones, I mean), or coins. However, if inflation fails to soar, these things can bite you. Housing is already very expensive and precious metals tend to be a very medicre investment at best in times of low inflation. Same true of stamps, coins, etc. If I KNEW for a fact that inflation would soar, however, I'd be confident in this investment advice.

 

[zendari]

Originally posted by: techs

Originally posted by: zendari
Actually, if anything, employer compensation in the healthcare field has increased.

Text

Their spending increased 9.2% in 2005. It's not shrinking; the overall price of healthcare is increasing at a faster rate relative to employer contributions and the consumer is making up a larger difference.

This 9.2% is why worker compensation is well on the rise even if real wages are stagnant.

Once again you have reached a wrong conclusion.
So many people don't have any employer paid or assisted health care that there are relavtively fewer companies that are increasing their health care contributions. And if the companies that have health care are not increasing their contributions by, say, 4 percent this year to keep up with inflation than they are actually decreasing their compensation in terms of real wages.
And all the traditional measures of "real wages" include health care contributions so your wacky idea that somehow workers are really increasing their real wages is just that, wacky.

You clearly didn't read the 9.2% figure, which is a sum of all employers including those who don't pay benefits. Your 4% inflation figure is nowhere near accurate. Most economics find 2005 inflation to be around 3.4%.

I love how liberals like to place CEO salaries in the form of "compensation" including nonsalary benefits but the same doesn't apply for anyone else.

 

[dullard]

Originally posted by: zendari
You clearly didn't read the 9.2% figure, which is a sum of all employers including those who don't pay benefits. Your 4% inflation figure is nowhere near accurate. Most economics find 2005 inflation to be around 3.4%.

I think that you, Zendari, don't understand what Techs was saying. And I think Techs is purposely ignoring what Zendari is saying. I would be very impressed if either of you ever had the guts or the intelligence to once listen and understand the other person.

Zendari, you are correct that AVERAGE employer sponsered health care costs went up 9.2%. Of course, the employee paid portion of that health care went up 10%, partially offsetting that 9.2% rise. Thus, the actual increase to what the employer paid was closer to 7%. But still, that is in increase and it should be counted as part of the wages. You are correct on this issue Zendari.

However, Zendari, not all employers pay for health insurance. If you get $0 in health insurance, a 9.2% rise is still $0. I hope you are not too stubborn to realize this point. These are the people Techs is talking about. Why can't you see this?

I do have issue with your "Your 4% inflation figure is nowhere near accurate" comment. Inflation rates have increased for the last 2+ years (1.9% in 2003, 3.3% in 2004, 3.4% in 2005). They are still increasing. The annualized inflation rate for all of 2006 to date is 5.6% (using Dec 2005 through Apr 2006 CPI numbers). I certainly don't expect that 5.6% to continue. I do however expect, like many economists, a nearly 4% inflation rate for 2006. But even if we use your numbers, and pretend 2006 had a 3.4% inflation rate, then Techs is only off by 18%. An 18% error is significant but it isn't massive. Being off by 100% would be "nowhere near accurate". 18% error is near accurate, but not quite accurate.

 

[conjur]

Core CPI up 0.3% last month (more than expected) and annualized it's running 2.6% (pfft...like it's really that low) which is increasing odds the Fed will bump up interest rates yet again (AMEX is down as small caps get hurt by rises in rates).

But, let's look at some raw material price increases, shall we?

http://www.joc.com/data/pricesindexes.shtml

The Journal of Commerce -- Economic Cycle Research Institute Industrial Price Index (JOC-ECRI IPI) is designed to yield a cyclical leading indicator of the inflation cycle. Cyclical turns in raw material price inflation, as measured by the growth rate of the JOC-ECRI IPI, anticipate cyclical turns in consumer inflation. Superior performance is achieved by the careful selection and combination of the components of the index, which is made up of a broad basket of the industrial commodities that have the best cyclical relationships with inflation. The foundation for the JOC-ECRI IPI is the work of Geoffrey H. Moore and his research staff, who have studied economic and inflation cycles for decades.

Index Annual Change (%) +15.20

Petro Annual Change (%) +39.06[



But yet the cheerleaders insist the economy is great and can't understand why people think the economy is in a rut (as they can't save any money and are living on borrowed money)

 

[Slew Foot]

Well if you discount food, oil, energy, health care, and education, inflation probably is at around 2.6%.

High end video cards and plasma TV's for everyone!

 

[dullard]

For the PPI, there was good monthly news, but the yearly news is still in the caution zone.

Monthly PPI up just a measly 0.1%.

Good news:
[*]July PPI up just 0.1%.
[*]Core July PPI (excluding energy and food) is down 0.3%.
[*]The core PPI dropped because light truck prices dropped 3.1%. A price war between AMD and Intel also helped drop computer and electronic prices.

Not so good news:
[*]PPI is up 4.2% from this time last year.
[*]Finished goods (what stores pay for the items) is up 5.1% in 12 months. This price increase is what is leading to CPI rising.
[*]Intermediate goods (not yet finished) prices up 8.9% in the last year.

 

[Slew Foot]

Light truck sales are flat because of high gas prices, not surprised that prices are falling. Of course, food and energy keep getting more expensive, that plus shelter amkes up the majority of a household budget.

 

[Jamie571]

Originally posted by: dmcowen674

Originally posted by: Engineer
Wholesale inflation jumps 1.9% in September.

/Republican Mode On

It's all still Clinton's fault

/Republican Mode Off

Insert Democrat for Republican and Bush for Clinton after 2008.

My God what an endless cycle of blaming someone else. Oh I forget its the American Way.

 

[dullard]

Originally posted by: Jamie571
Insert Democrat for Republican and Bush for Clinton after 2008.

My God what an endless cycle of blaming someone else. Oh I forget its the American Way.

Bush will have some impact after he leaves. His policies can't/won't be all overturned immediately. However, I've never once heard a democrat give credit/blame to someone 4+ years after leaving office. That is, however, a common Republican belief. I've heard many Republicans give Reagan credit for the 1990 boom.

 

[dullard]

New CPI numbers are out. July CPI up 0.4%, core up 0.2%.

That leaves the CPI number up 4.1% from this time last year, and an annual rate for the 2006 year to date at 4.8%. Inflation has been steadilly increasing over the last few years, and doesn't show much signs of going back to the good <3% territory any time soon.

 

[Slew Foot]

Isnt the annual target for the CPI supposed to be under 2%? So isn't this real bad news that we're on an annual 4-5% rate increase?