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Highest spike in 26 years - hello 1979? (http://ap.google.com/article/ALeqM5jsanM66tszKz1zFq0LOG4XvWS7zAD8U6BFNO1)

http://www.cleanmpg.com/photos/data/501/Move_Beyond_Oil.jpgMartin Crutsinger - AP - Jan 15, 2008

Washington - Wholesale inflation shot up in 2007 by the largest amount in 26 years even though falling gasoline costs allowed price pressures to moderate in December.

The Labor Department reported that wholesale inflation was up 6.3 percent for all of 2007, reflecting a huge increase for the year in various types of energy costs ranging from gasoline to home heating oil.

The year ended on a more positive note, with wholesale prices falling by 0.1 percent in December. That reflected decreasing costs at the time for gasoline and other energy products. It was a significant slowdown after prices had soared by 3.2 percent in November, which had been the biggest one-month increase in 34 years.

Meanwhile, the Commerce Department reported that retail sales fell by 0.4 percent in December. It was a worse-than-expected decline and increased worries that the country could topple into a recession…http://ap.google.com/article/ALeqM5jsanM66tszKz1zFq0LOG4XvWS7zAD8U6BFNO1

It is very difficult for me to belive that anything that includes the cost of gasoline in its calculation only has gone up 6.3% in 2007. It is even harder for me to understand how their index actually fell 1/10 of 1% in December.

But I have been a buyer all my life. I am quite versed on the art of proving ANYTHING with numbers. You tell me what you want to say and I will show you how "the numbers" prove you right!

Although not the same thing as wholesale prices, lately I haven't been able to reconcile the BLS' stated Consumer Price Index (http://www.bls.gov/cpi/) with reality. The last 2 years or so, I swear I see much more inflation at my local grocery store than the 2-3% per year that the CPI's food index indicates. What I'm seeing has got to be in the 5-10% range per year.

And the Economist is claiming that world food prices have spiked 75% since 2005:

http://www.economist.com/images/20071208/CLD454.gif
http://www.economist.com/images/20071208/CBB438.gif

They had a front page feature on this a few weeks ago. I never saw it show up in cleanmpg's News section, but they attribute the price growth to two primary factors:

Emerging countries' increasing demand for food (and more meat versus grains) over the longer term,
America's demand for ethanol in the shorter term.


Scary stuff. Here are the original articles:
http://www.economist.com/opinion/displaystory.cfm?story_id=10252015
http://www.economist.com/displaystory.cfm?story_id=10250420

Although not the same thing as wholesale prices, lately I haven't been able to reconcile the BLS' stated Consumer Price Index (http://www.bls.gov/cpi/) with reality. The last 2 years or so, I swear I see much more inflation at my local grocery store than the 2-3% per year that the CPI's food index indicates. What I'm seeing has got to be in the 5-10% range per year.

And the Economist is claiming that world food prices have spiked 75% since 2005:

http://www.economist.com/images/20071208/CLD454.gif
http://www.economist.com/images/20071208/CBB438.gif

They had a front page feature on this a few weeks ago. I never saw it show up in cleanmpg's News section, but they attribute the price growth to two primary factors:

Emerging countries' increasing demand for food (and more meat versus grains) over the longer term,
America's demand for ethanol in the shorter term.



Scary stuff. Here are the original articles:
http://www.economist.com/opinion/displaystory.cfm?story_id=10252015
http://www.economist.com/displaystory.cfm?story_id=10250420

WOW! I just finished reading your attachments, WriConsult, and you are indeed right. The escallation of food prices is truly SCARRY STUFF, especially when you consider that it is happening in conjunction with the skyrocketing gasoline prices. :eek::eek:

For about a year now I have suspected that those responsible for reporting cost of living figures have been fudging them so as not to alarm us grunts. After looking at your attachments, I think there is not much doubt!:mad:

Thanks for the heads up!

Bob.

I'm not ready to level an accusation of fudging the numbers. There's an enormous amount of work that goes into compiling those figures, and it would take an enormous amount of additional work to fake them somehow in a systematic way that would escape notice by the army of economists who consume them.

But something seems wrong. All the signs on the ground point to very substantial inflation of food prices. I am unable to understand why it is not reflected in BOLS' figures. The only possible explanation I can think of is that their survey respondents are shifting their food purchases radically so as not to inflate their already stretched food budget. Food is the #3 bucket in most household budgets (after housing and transportation), and in a growing number of households it's moved up to #2. That shift happened years ago in my own house, by the way.

I'm not ready to level an accusation of fudging the numbers. There's an enormous amount of work that goes into compiling those figures, and it would take an enormous amount of additional work to fake them somehow in a systematic way that would escape notice by the army of economists who consume them.

But something seems wrong. All the signs on the ground point to very substantial inflation of food prices. I am unable to understand why it is not reflected in BOLS' figures. The only possible explanation I can think of is that their survey respondents are shifting their food purchases radically so as not to inflate their already stretched food budget. Food is the #3 bucket in most household budgets (after housing and transportation), and in a growing number of households it's moved up to #2. That shift happened years ago in my own house, by the way.

CPI and most other indexes measure general inflation. IE, inflation without volatile goods. The two main items left out? Fuel (Heating and auto) and Food.

That why you hear "inflation not including gas and food" on the radio.

True, but the 3% rate of inflation I quoted in my earlier post was from the CPI food index, believe it or not.

Link Please. I've never heard of a CPI food index.

For some interesting reading, and a small ;) dose of conspiracy theory about the published statistics, read:
http://www.shadowstats.com/

For some interesting reading, and a small ;) dose of conspiracy theory about the published statistics, read:
http://www.shadowstats.com/

Hello, Andrew;

Your attached web site deals a lot about what WriConsult & I have been discussing (See Above). The writer, John Williams, seems very knoledgeable. You have to pay real money to get into his "good stuff" but I printed off his "Government Economic Reports: Things you've suspected but were afraid to ask!"

It is defenitely not light reading and I will pour myself a good shot of 100 proof Bookers before approaching the "small dose of conspiricy" you warned me of.

But, just casually going over the 5 parts, it seems like our saying the governments reporting of economic indicators is "fudging" is sort of like calling the Great Wall of China a fence!

Thanks a lot for this wealth of information. I will be commenting on it as I digest the elephant.

Link Please. I've never heard of a CPI food index.Gladly. On either of these pages:

http://data.bls.gov/cgi-bin/surveymost?cu OR http://data.bls.gov/cgi-bin/surveymost?cw

Select U.S. Food and Beverages - CUUR0000SAf.

Update: when I wrote my earlier post the other day, the index value for 2007 Annual hadn't been calculated yet. It's now there, and shows about a 3.9% increase over 2006. Still seems oddly low to me.