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12 Month Gain In Imported Food Costs Biggest On Record And Other "Transitory" Observations

Tyler Durden's picture




 

And once again inflation refuses to accept it is transitory. April Import Price Index was reported up 2.2%, following a revised 2.6% increase in March (previously +2.7%). Notably, the core of the action was in petroleum and food prices. From the release: "Foods, feeds, and beverages prices advanced 1.8 percent in April after a 4.2 percent rise in March. The April increase was driven by a 22.8 percent jump in coffee prices....The price index for nonfuel industrial supplies and materials rose 1.7 percent in April following a 2.0 percent rise the previous month. Both increases were led by higher  chemical and unfinished metals prices, which increased 2.4 percent and 1.7 percent, respectively, in April.  The rise in chemical prices was driven by a 6.6 percent advance in plastics prices, and the largest contributors  to the rise in unfinished metals prices were prices for gold and other precious metals." In a nutshell, the 12-month advance in April was the largest year-over-year increase since an 11.2 percent gain between April 2009 and April 2010.

More from Stone McCarthy:

The index for import prices has now risen more than 1.0% in each of the past seven months. The last time a similar string occurred was in the period in early 2008 when widespread gains in commodities exerted upward pressure. The BLS noted that this was the first time the index rose more than 2.0% in two consecutive months since June 2008. While price pressures remain well-contained so far, increases affect all major categories.

Fuel import prices were up 6.7% in April, continuing a string of substantial rises over the last seven months.

Nonfuel imports were up 0.6% in April. Import prices for foods advanced 1.8%, while nonfuel industrial supplies and materials rose 1.7%. In nonfuel supplies, prices were up for chemicals (+2.4%) and unfinished metals (+1.7%).

Finished goods prices were more restrained. Prices for capital goods edged up 0.1%, while those for consumer goods excluding autos rose 0.4%. Prices for autos and parts increased 0.4%.

And a follow up from Goldman:

Import & Export Prices - Weaker Dollar

MAIN POINTS:

1. US import prices rose by 2.2% mom in April, slightly more than expected. Higher prices for petroleum products contributed to the increase, as did other unfinished industrial goods (e.g. plastics and precious metals). Rising global commodity prices are the main factor behind the relatively high growth rate (+11.1% yoy) in overall US import prices.

2. However, the April report arguably also showed signs of pass-through from the weaker dollar to the prices of finished imported goods. Prices for finished non-auto consumer goods rose by 0.4% mom, vehicle prices rose by 0.4%, and finished capital goods by 0.1%. Prices for all manufactured products increased by 0.8%, and are now up 2.8% from a year earlier. Prices of imports from China rose by 0.4% mom, and have now increased for seven consecutive months

Don't forget: a margin hike a day, keeps the 15 minute inflation monster at bay.

 

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Tue, 05/10/2011 - 09:09 | 1258746 kaiserhoff
kaiserhoff's picture

Damn, there goes my truffles budget.  Glow in the dark sushi, anyone?

Tue, 05/10/2011 - 09:13 | 1258768 Sudden Debt
Sudden Debt's picture

Dolphin Sushi or Whale Sushi?

 

Tue, 05/10/2011 - 09:07 | 1258752 SheepDog-One
SheepDog-One's picture

Margin hikes are the last gasp ham fisted acts of desperate people.

Tue, 05/10/2011 - 09:19 | 1258788 magpie
magpie's picture

Last ? Third to last, right before price controls and government distribution monopolies.

Tue, 05/10/2011 - 09:32 | 1258829 hedgeless_horseman
hedgeless_horseman's picture

Best to understand now the math of the future...

 

    price controls

+  government distribution monopolies

=  black markets

 

I will try to save you some seats at the disintermediationists' supper club.  

Tue, 05/10/2011 - 10:03 | 1258855 depression
depression's picture

4 More Years !!!

Whatever it takes, get it done !

Tue, 05/10/2011 - 09:08 | 1258757 LawsofPhysics
LawsofPhysics's picture

Precisely why I sold my paper gold (not physical) holdings in November of 2010 to purchase 40 more acres of arable land (now leased to a foreign company for soybean production).

 

Despite modern economics failure to recognize reality, people will always need to eat.

Tue, 05/10/2011 - 10:53 | 1259150 boiltherich
boiltherich's picture

Another thing 75 million of us still do and in a lot of case will do before we spend a dime on food is smoke tobacco.  Whatever your feelings about it growing tobacco is getting almost as profitable as growing pot.  I had a medical appointment up in Spokane last week (650 mile drive each way to see the doctor) and when I left the hospital I stopped for gas and realized I had packed my ciggs in my luggage in the trunk of the car, so I opted to buy a pack rather than unpack and go through my stuff at a self serve station (something we do not have here in Oregon) and I was horrified when the very nice Hindu woman said that will be $7.66 for a single pack of Marlboros.  I pay $4.80 here in Medford and that is after a $10 per carton tax increase 2 years ago.  Of course we do not have sales tax here in Oregon (yet) and that helps, but any time there is that much of a difference in prices with nothing but a river and an imaginary boundry seperating them the cheaper will end up rising.  As to the effects of inflation, when I was in the Air Force in the mid seventies we bought the same smokes for $1.12 a carton, that is 11 cents a pack, nearly a 7000% increase from the pack I bought in Spokane a few days ago. 

Tue, 05/10/2011 - 11:10 | 1259202 LawsofPhysics
LawsofPhysics's picture

We also have tobacco and cotton.  Waiting to jump on pot once it is legal in our area.

Tue, 05/10/2011 - 09:09 | 1258760 John Law Lives
John Law Lives's picture

<<<  Notably, the core of the action was in petroleum and food prices >>>

Good thing food and energy prices don't count in core CPI calculations.  Gee, I feel better already.  I think I'll buy a gas guzzler and drive over to Starbucks for a $5 latte... since energy and food prices are not considered to represent inflation...

Tue, 05/10/2011 - 09:20 | 1258800 Cognitive Dissonance
Cognitive Dissonance's picture

Can't find what you don't measure or even look for. Brilliant.

Reminds me of what the NIST spokesman said when asked if the NIST looked for explosive residue in the World Trade debris and dust. To paraphrase the spokesman......."Why would we look for something that is not there to begin with."

I love circular thinking. It's so satisfying when you always get the answers you look for and never find anything you don't try to find.

Tue, 05/10/2011 - 09:26 | 1258840 John Law Lives
John Law Lives's picture

<<<  I love circular thinking. It's so satisfying when you always get the answers you look for and never find anything you don't try to find. >>>

Sounds like organized religion...

Tue, 05/10/2011 - 09:26 | 1258842 lizzy36
lizzy36's picture

It is very helpful, when the government answers the question, and then designs the sytem, to ensure that answer.

That is a system one can believe in.

PS: can we eat iPads yet. or will that be version 3.0: edible iPads?

Tue, 05/10/2011 - 09:17 | 1258778 John Law Lives
John Law Lives's picture

I wish Wikileaks would release a copy of the memo that was sent out to the MSM telling them to spin every goddam bit of economic data.  

Tue, 05/10/2011 - 09:49 | 1258918 augie
augie's picture

Dear MSM,

we essentially own your collective asses and if you do not portray this administration in a favorable light, you can kiss your "exclusives" and your advertising revenues goodbye.

 

Love and kisses,

 

(yes we can)

Jay Carney


Tue, 05/10/2011 - 09:59 | 1258938 John Law Lives
John Law Lives's picture

+1

Good one!

Tue, 05/10/2011 - 09:15 | 1258767 Cassandra Syndrome
Cassandra Syndrome's picture

Its tragic that in the late 19th century, deflation was welcomed and considered an economic wonder and that inflation was like a cross to Dracula to the people of that era.

Today, people are brainwashed into thinking rising prices is a healthy sign of growth and deflation is evil.

 

Tue, 05/10/2011 - 10:16 | 1258982 Jim Lahey
Jim Lahey's picture

Great point.  The deflationists are not wrong, rather, they are held at bay by TPTB manipulation schemes.  The ghost of Gary Shiling continues to await the age of deleveraging.

Tue, 05/10/2011 - 10:30 | 1259061 LawsofPhysics
LawsofPhysics's picture

Yep, bring on the deflation already.  It would be good for us.  The "wealth" is a fraud, the "debt" is a fraud.  Crash the fucking system already so compensation can return to those that actually add real value to the economy.

finite planet bitches!  Impossible to have inflationary growth in a business cycle without the deflationary periods.  Modern economists need to all be taken out of their ivory towers and shot.

Tue, 05/10/2011 - 11:39 | 1259335 Libertarian777
Libertarian777's picture

deflation is good for savers, and encourages saving.

inflation is suppose to be good news for debt borrowers. However it encourages MORE debt (borrow now pay back with debased dollars later), and becomes a death spiral (not a 'virtuous circle'). If debt is increasing at rate x, you're almost assured inflation is increasing at x+y rate, so you need ever more debt to function at ever lower standards.

Oh, I forget though, deficit spending and war is good for the economy. You know, we should start a war with China/North Korea/Iran, conscript all 15million unemployed people and send them there. Unemployment will be 0% instantly.

Japan's economy is roaring now that the tsunami hit.  You know helping their construction industry and all. Break your neighbour's window, that way GDP goes up when the repairman fixes it.

Tue, 05/10/2011 - 09:17 | 1258777 Misean
Misean's picture

Once the USDA releases nutrition information on iPads, that food infaltion number will fall precipitously. Not a problem.

Tue, 05/10/2011 - 09:16 | 1258787 pazmaker
pazmaker's picture

boy have I noticed the coffee price!  My one only addiction that I can't do without.

Tue, 05/10/2011 - 09:17 | 1258796 youngman
youngman's picture

It looks like all the "speculators" have moved to grains and food now

Tue, 05/10/2011 - 09:21 | 1258806 oogs66
oogs66's picture

the only thing transitory will be the sell-off we had in commodity prices last week

 

Tue, 05/10/2011 - 09:23 | 1258818 firstdivision
firstdivision's picture

Looking at that chart, we are having '08 redux going on.  This summer is going to get interesting.

Tue, 05/10/2011 - 09:41 | 1258886 Vergeltung
Vergeltung's picture

scary that!!

 

Tue, 05/10/2011 - 09:41 | 1258879 lizzy36
lizzy36's picture

Arby's/Wendy's 3rd largest U.S. fast-food restaurant operator lowered its 2011 profit forecast citing rising commodity costs.

Apparently, beef gristle washed with ammonia is getting more expensive.

Tue, 05/10/2011 - 09:52 | 1258917 hedgeless_horseman
hedgeless_horseman's picture

Apparently, beef gristle washed with ammonia is getting more expensive.

You ain't seen nothing yet!  There is a serious drought in Texas (largest American beef producer) and no grass for feed this summer.  Ranchers are culling herds, and thus pushing beef prices down...temporarily.  Just wait until 12 months from now when the effect of the smaller herds hits the market. 

One of my friends is shipping East Texas feeders to Missouri, intent on bringing them back to Texas.

BTFD [in cattle] YFI.

Tue, 05/10/2011 - 10:07 | 1258958 Jim Lahey
Jim Lahey's picture

Dollar Menu translation?  As long as this year cardboard herd is intact we should be good.

Tue, 05/10/2011 - 10:11 | 1258971 serotonindumptruck
serotonindumptruck's picture

But on the plus side, there is no need to irradiate that beef gristle. Dollar cost averaging at its finest.

Tue, 05/10/2011 - 09:52 | 1258929 PulauHantu29
PulauHantu29's picture

Yeah, I bought GLD in August 2009 at 91.5....now it's 147....a 61% increase......I guess it's just a "transitory" profit...LMAO.

Tue, 05/10/2011 - 13:45 | 1259732 Bay of Pigs
Bay of Pigs's picture

147? GLD is joke. Not even close to being a proxy for gold, let alone backed by the real thing. Spot at $1517 and KITCO selling one US Eagle for $1601.

So how do they purchase gold at $1470 to back this POS? It is impossible, and anyone who has read their prospectus knows this thing a fractional reserve ponzi gold fraud.

 

Tue, 05/10/2011 - 10:22 | 1259016 Catullus
Catullus's picture

Impossible!!! Paul Krugman told me there's no risk to inflation because workers aren't demanding higher wages.

Haha. Broken economic models.

Tue, 05/10/2011 - 10:44 | 1259103 Temporalist
Temporalist's picture

Their reasoning is so demented it is hard to fathom.  So because people feel lucky to have any job at all, are trapped in part time work, have families to feed, and have no options to leave, that they aren't demanding higher wages means there is no inflation.

Tue, 05/10/2011 - 10:27 | 1259043 Ying-Yang
Ying-Yang's picture

I grow tired of the term transitory....

How 'bout one of these every now and then:

brief, deciduous, ephemeral, evanescent, flash, fleeting, fugacious, fugitive, impermanent, passing, short-lived, temporary, transient, momentary

I like fugacious.

Tue, 05/10/2011 - 10:38 | 1259092 Temporalist
Temporalist's picture

I like Fugazy (Fugazi):

http://en.wiktionary.org/wiki/fugazi

Tue, 05/10/2011 - 13:11 | 1259638 TexasAggie
TexasAggie's picture

For the 1st 2 yrs of this administration, their catch phrase was "unexpected" - unemployment after the stimulus bill passed "unexpectedly" increased, etc.  I guess "unexpected" wore out its welcome.

Tue, 05/10/2011 - 14:36 | 1259916 krispkritter
krispkritter's picture

I like Fugawi. As in "Why the Fugawi in this situation to begin with?" or "Why the Fugawi not trying to fix this?"

Tue, 05/10/2011 - 10:42 | 1259093 Temporalist
Temporalist's picture

I should have shared this here:

"a record number of 44 million or one in seven Americans (half of whom are children) are currently enrolled in the government's largest nutritional safety net program — the Supplemental Nutrition Assistance Program or SNAP, according to the USDA. Formerly known as the Food Stamp Program, SNAP is federally funded, but administered by states.

Additionally, government-affiliated food banks and other community and faith-based food pantries and soup kitchens served more than 37 million Americans, according to Feeding America's 2010 hunger study. This figure is up 46% from 2006."

http://www.usatoday.com/money/economy/2011-05-10-new-face-of-hunger-food...

Tue, 05/10/2011 - 11:17 | 1259237 boiltherich
boiltherich's picture

http://www.fns.usda.gov/snap/government/FY11_Income_Standards.htm

These are the income guidelines for SNAP eligibility, I suggest people have a look at them and then think about how is it 44 million people could possibly be on these benefits with millions more that qualify but refuse to ask for them, or for other technical reasons can't get them. 

The poverty level according to the government has risen with CPI increases and is now $903 per month for a single person household.  And while a single person might be just barely able to survive on that in the vast empty red states (if you do not have a vehicle to support and you have no bad habits, no bad luck, are in good health, and have the support of friends and family for things like rides) but you would be in dire poverty in most blue states or red state urban areas at twice that amount.  Even here in relatively rural Medford Oregon a one bedroom apartment will run you over $600 per month, leaving you the stupendous sum of 303 bucks for everything else one has to have each month. 

Now these "leeches" hear the right calling them names and blaming them for all the nations woes when they mostly worked all their lives or were disabled through no fault of their own and what do you think is going through their minds when some rich fat republican fucker blames the poor for all his problems?  Pitchforks?  Torches?  Guillotines?  Really, if you have enough income to pay any taxes you might reflect upon the vastness of the army of the truly poor out there who will someday seek economic justice.  Not all of you here at ZH, but some of you look to the casual observer just like the Russian upper middle class of the late 19th and early 20th century, cursing the weak and the stupid proles demanding justice and bread, and denying reality the whole time till it is you that is collectivized. 

Tue, 05/10/2011 - 10:53 | 1259152 MonkeySmoke
MonkeySmoke's picture

Transitory bitchez!

Tue, 05/10/2011 - 11:09 | 1259210 Laddie
Laddie's picture

China will outbid traditional Americans on food from US, then the real fun begins.
How is that DROUGHT coming along? Not to mention the fecundity of the new demographics.

Tue, 05/10/2011 - 12:24 | 1259467 Ying-Yang
Ying-Yang's picture

Fecundity is the potential reproductive capacity of an individual or population

Had to look that one up myself.

Tue, 05/10/2011 - 12:27 | 1259481 Ying-Yang
Ying-Yang's picture

Years ago my wife got fixed... we had plenty of kids, but she often reminds me I have fecundity.

I keep telling her I may have to repopulate the world one day.... (groan).

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