Watch for prices at the pump to come down next week, I have noticed the week before CPI is released Gas prices always dip. Then they jump right back up, now you know the reason. Its to keep inflation numbers in check. So start watching these gas prices over the next 10 days. I have seen as big a drop as 8 cents overnight at my local station, just to have it pop right back up in a couple of days. If their is know drop in prices paid at the pump, then the CPI number will take everyone by surprise mark my words.
CPI: Consumer Price Index Importance (A-F): This release merits a B+. Source: Bureau of Labor statistics, U.S. Department of Labor. Release Time: 8:30 ET, about the 13th of each month for the prior month. Raw Data Available At: http://stats.bls.gov/news.release/cpi.toc.htm. The Consumer Price Index is a measure of the price level of a fixed market basket of goods and services purchased by consumers. CPI is the most widely cited inflation indicator, and it is used to calculate cost of living adjustments for government programs and it is the basis of COLAs for many private labor agreements as well. It has been criticized for overstating inflation, because it does not adjust for substitution effects and because the fixed basket does not reflect price changes in new technology goods which are often declining in price. Despite these criticisms, it remains the benchmark inflation index. CPI can be greatly influenced in any given month by a movement in volatile food and energy prices. Therefore, it is important to look at CPI excluding food and energy, commonly called the "core rate" of inflation. Within the core rate, some of the more volatile and closely watched components are apparel, tobacco, airfares, and new cars. In addition to tracking the month/month changes in core CPI, the year/year change in core CPI is seen by most economists as the best measure of the underlying inflation rate. ----------------------------------------------------------------------------------- It is bogus to look at CPI excluding the two measures we use everysingle day FOOD AND ENERGY.
CPI and PPI are not nearly as important measures of inflation as everything thinks. in fact Greenspan even stated that he "doesn't like CPI." It is somewhat hard to now beleive traders should be watching this number closely when the fed officials don't even care about it, and it probably won't influence monetary policy.
I could care less what Greenspan thinks, I will take my cues off the bond market. Greenspan is nothing more than a politician on his way out the door. Fed policy replaced the internet bubble with a housing bubble. Americans are leveraged up to their eye balls with their homes as collateral, and no savings. This is what you get when you listen to Greenspan.
Late last year food prices jumped because of those hurricanes that hit Florida and flood in California. Those were one time events. You expect to set monetary policy based upon one time events? Energy prices will show up in the core CPI if producers are able to pass along that cost.
I do all the shopping in my family of 4. Milk and dairy have been rising, the same 18oz box of wheaties I have been buying for the past 5 years from the same Kroger has risen 60%. Coffee, Sugar. up why??? Energy thats why.