Holly $%%^ Batman have you seen the inflation numbers in the UK! PPI = 10% http://www.bloomberg.com/apps/news?pid=20601087&sid=aHDxY5b2oQdQ&refer=home .K. Producer Prices Rise at Fastest Pace Since 1986 (Update3) By Brian Swint July 14 (Bloomberg) -- U.K. producer prices increased at the fastest pace in at least 22 years in June, making it harder for the Bank of England to cut interest rates as the economy edges toward a recession. Prices charged by factories rose 10 percent from a year earlier, the most since comparable records began in 1986, the Office for National Statistics said in London today. Economists forecast 9.9 percent, according to the median of 28 estimates in a Bloomberg News survey. Prices increased 0.9 percent from May. Manufacturers have raised prices to pass on the burden of record oil costs, undercutting living standards as Britain faces the prospect of its first recession since 1991. The Bank of England kept its benchmark interest rate at 5 percent on July 10 after inflation reached the fastest pace in more than a decade. ``These are a ghastly set of numbers,'' David Page, an economist at Investec Securities in London, said in an interview on Bloomberg Television. ``It really leaves the Monetary Policy Committee on the horns of a dilemma. We are seeing an economy close to a recession but we see a risk of inflation rising to 4.5 percent by the end of the quarter.'' Brent crude oil prices rose to a record $147.50 on July 11. Along with rising food costs, that is adding to the burden of consumers already feeling the pinch of tighter credit, and eating into company earnings. British Polythene Industries Plc, Europe's largest producer of plastic packaging, said July 3 that the company's price increases won't be enough to cover the higher cost of materials and that profit margins will decline. Credit Crunch ``We are dealing with a trebling of oil prices, we are dealing with a doubling of food prices, and we are dealing with the credit crunch,'' Prime Minister Gordon Brown told reporters in London today. ``Yes we will consider further measures. We are trying to do what we can to help hard-pressed households.'' The annual gain in output prices was last higher in February 1982, the statistics office said. Records before 1986 use a different measure of manufacturing that excludes petroleum refining. Britain is headed for ``quite a recession,'' former Bank of England policy maker Charles Goodhart said last week. Policy maker Kate Barker says that the central bank is worried that it will weaken the economy more than needed to control inflation by keeping monetary policy ``too tight,'' according to an interview published in the London-based Times today. Interest Rate At 5 percent, the Bank of England benchmark rate is the highest of the Group of Seven industrialized nations. In the U.S., the rate is 2 percent and on July 3 the European Central Bank lifted the main rate for the 15 euro nations a quarter-point to 4.25 percent to fight the fastest inflation since 1992. The pound was little changed after today's report at $1.9867 as of 11:50 a.m. in London. It was at 79.87 pence per euro. In the U.K., raw material costs jumped 30.3 percent from a year earlier, the most since the series started in 1986, with crude oil costs accounting for more than half the increase. Input prices rose 2.1 percent from May. Prices for home-produced food and metals fell. Sterling has fallen 12 percent against the currencies of its main trading partners over the past year, pushing up the cost of imported goods. The price of imports rose 20 percent in June from a year earlier. Dairy Costs Robert Wiseman Dairies Plc, Scotland's largest provider of fresh milk, said July 3 that it aims to raise selling prices again after energy and packaging costs increased further. Core producer prices, which exclude food, beverages, tobacco and petroleum, rose an annual 6.4 percent, the most since April 1982. Prices rose 0.3 percent from May. The monthly rate of increase fell from 1.4 percent as scrap metal prices slipped. Consumer-price inflation surged to 3.3 percent in May, the highest since the U.K. central bank was given control over interest rates in 1997. King said the rate may exceed 4 percent later this year. For interest rates, ``the next move will be down but it won't be for a couple of months,'' said Howard Archer, chief U.K. economist at Global Insight Inc. in London. ``There's mounting evidence that the downturn is deep. The economy will stagnate at best later this year.''
More inflation....or in this case stagflation. http://www.bloomberg.com/index.html?Intro=intro3 New Zealand Inflation Accelerates to 18-Year-High (Update2) By Tracy Withers July 15 (Bloomberg) -- New Zealand's consumer prices rose at the fastest pace in 18 years in the second quarter, fanned by fuel and food costs, adding to signs the economy is facing stagflation as it slips into recession. The consumer prices index rose 1.6 percent from the first quarter, Statistics New Zealand said in Wellington today. The median estimate of 12 economists surveyed by Bloomberg was for 1.4 percent. From a year earlier, prices rose 4 percent. Rising prices are combining with record-high interest rates, a drought and a slumping housing market to stall New Zealand's $104 billion economy. Reserve Bank Governor Alan Bollard said last month he couldn't rule out the possibility of a recession as household spending slows and companies invest less. ``It's certainly stagflation in the sense that the economy isn't growing and it's got an inflation problem,'' said Matthew Johnson, an economist at ICAP Australia Ltd. in Sydney. ``It's a tough situation for the central bank to be in. If they cut in the face of accelerating inflation, they are risking a policy error, which could be very expensive in the long run.'' New Zealand's dollar bought 76.28 U.S. cents at 11:25 a.m. in Wellington trading from 76.40 cents immediately before the report. The chance of a rate cut at the next review on July 24 fell to 52 percent from 58 percent, according to an index calculated by Credit Suisse based on swaps trading. Recession Risk Bollard said on June 5 that slowing growth will return inflation below the 3 percent limit of his target range by mid- 2010 and it is likely he will cut the benchmark interest rate from 8.25 percent this year. Three of 13 economists surveyed by Bloomberg expect a rate reduction on July 24. Ten expect a cut in September. The economy contracted 0.3 percent in the first quarter. Eight of 13 economists surveyed by Bloomberg say it also shrank in the second quarter, putting the economy in its first recession since 1998. A net 23 percent of companies say sales will slow in the next three months, the most pessimistic outlook since 1990, suggesting the economy will also contract in the third quarter, according to a July 8 report from the New Zealand Institute of Economic Research. Bollard expects annual inflation will accelerate to 4.7 percent in the year ending September, the highest since 1990, as fuel and food costs rise. Retail Sales Bollard is under pressure from companies and home-owners to cut interest rates as drought, international credit turmoil and a slump in the housing market weigh on consumer spending. Hallenstein Glasson Holdings Ltd. said last week that full- year profit will fall at least 28 percent as sales drop, the third retailer to cut earnings forecasts in the past two weeks. Retail spending in May had the biggest slump in four years, Statistics New Zealand said yesterday. House sales fell for a fourth month in June, dropping to a 16-year low. Bollard's primary focus is on non-tradable inflation, a core measure of prices that are not influenced by currency fluctuations and fuel, say economists. Non-tradable prices rose 0.9 percent from the first quarter when they increased 1.1 percent. The result matched economists' forecasts. Prices gained 3.4 percent from a year earlier, the slowest annual pace since early 2003. Fuel and food prices, plus the cost of owning a home, made the biggest contributions to second-quarter inflation. Gasoline Prices Gasoline prices rose 13 percent in the quarter and 26 percent from a year earlier. Excluding gasoline, consumer prices gained 1 percent in the quarter and 2.7 percent over the year, the agency said. Diesel prices jumped 29 percent. Fanned by jet fuel costs, domestic airfares rose 3.9 percent and international fares also increased. Food prices rose 2.2 percent led by bread, snack foods, fish and vegetables. A 3.6 percent increase in electricity prices led to an increase in the cost of owning a home. Rentals rose 0.7 percent. The cost of buying and building a new house gained 1.1 percent. The price of new cars, computers and overseas holidays declined as a rising currency curbed the cost of imports. Air New Zealand Ltd., the nation's biggest airline, raised fares by an average 10 percent between March and June, citing record-high jet fuel prices. Electricity prices have increased as a drought depleted the levels of lakes and rivers that account for 60 percent of the nation's generation.
Excellent post and cite, Aaron. The jig is up, fellas. If Bernanke throws out bs inflation figures now, the last shred of credibility he may have will evaporate faster than piss on a hot tin roof. It's time for Volcker style!!!
Inflation in the current case has been caused by dollar weakness. Since the US deficits are in the trillions, and held by foreign investors, the current regime in the white house has created a capital flight from the US. Our current crisis is generated from the rest of the world failing to trust in the US financial system. If some solutions come about in the next year, this whole mess could be over, but for now, you must buy commodities such as crude oil and gold. Who do you think is selling FNM, FRE, BAC, WM, LEH, C, etc. It's the foreign investors who were supporting our trade deficit by re-investing in the capital accounts. The key to this is restoring confidence in the US financial system, while changing the regime in the white house that is more supportive of peaceful resolutions around the world.