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Abnormally Warm Weather Keeps Inflation In Check As Energy Prices Rise, Core Inflation Highest Since September 2008

Tyler Durden's picture




 

Bernanke, and his recent inflation targeting plan, should be delighted with today's CPI number which while missing headline expectations of a 0.3% increase M/M and printing at 0.2%, rose 2.9% year over year, just higher than consensus, although down from December's 3.0% - the primary reason for the "miss" being a drop in utility gas services courtesy of April weather in January and February. On the other hand, core CPI continues trends ever higher, and is now up 2.3% Y/Y, an increase of 0.2%, in line with expectations, and up from December's 0.1%. This was the highest Y/Y number since September 2008. The good news is that the possibility of further QE is still embedded in the number. The bad news, is that WTI is about to take out $103 courtesy of the global central bank pump discussed yesterday, and allegations that CPI reflects merely some irrelevant hedonically adjusted number spring up again.

Core CPI:

From the release:

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in January on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.9 percent before seasonal adjustment.

 

The indexes for food, energy, and all items less food and energy all rose in January, each increasing 0.2 percent. Within the food group, the index for food away from home increased while the index for food at home was unchanged; within the energy group the gasoline index increased while the index for household energy declined.

 

Within all items less food and energy, the apparel index rose sharply, and the indexes for shelter, recreation, medical care, and tobacco increased as well. The indexes for used cars and trucks and for airline fares both declined, while the new vehicles index was unchanged.

 

The all items index has risen 2.9 percent over the last 12 months, a slight decrease from last month’s 3.0 percent figure. The index for energy has risen 6.1 percent over the last year and the food index 4.4 percent; both figures are slight declines from last month. The index for all items less food and energy has risen 2.3 percent, its largest 12-month increase since September 2008.

The biggest price increases were in Apparel (China still reexporting simmering inflation?) and Energy services, although the biggest drop was in the Utility Gas Services subcomponent - thank you warm weather.

 

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Fri, 02/17/2012 - 09:48 | 2169082 GeneMarchbanks
GeneMarchbanks's picture

Causality!

Why is it that I always think I'm being lied to in these statistics?

Fri, 02/17/2012 - 09:48 | 2169093 knukles
knukles's picture

Deep down inside we all truly knew there had to be something good about Global Warming. 

while europe freezes, but that's an anomoly

PS.  My SUV runs just fine on middle eastern oil, thank you very much

Fri, 02/17/2012 - 09:51 | 2169103 Badabing
Fri, 02/17/2012 - 10:20 | 2169208 Clayton Bigsby
Clayton Bigsby's picture

Pffft... and they say global warming is bad... Hell-looooo??? Lower headline inflation bitchesss....

Fri, 02/17/2012 - 09:45 | 2169084 francis_sawyer
francis_sawyer's picture

Turn those damn HAARP machines back on Mortimer!

Fri, 02/17/2012 - 09:46 | 2169088 LawsofPhysics
LawsofPhysics's picture

Going to get interesting for many farmers over the summer.  Tyler, look what happens to food prices during warm spells.  Good for us growers, bad for everyone else.

Fri, 02/17/2012 - 09:57 | 2169126 disabledvet
disabledvet's picture

Not to sound like a farmer but "better get that rain..yup, yup." you know somehow I can convince myself The Sphinxer really can give it all to me "tied in a little bow." never did see that plunge in interest rates coming...and I hate being wrong about the things I'm certain about. Can fuel prices soar "while no one is driving anymore" ... I guess so. Of course the driver isn't gonna get paid either way...so who gives a phuck.

Fri, 02/17/2012 - 10:10 | 2169177 LawsofPhysics
LawsofPhysics's picture

Yep, me too.  just glad I installed four more cisterns last summer and they are all full.  Also made a big bet on increasing energy prices in october and have the fuel stored already.  Chance favors the prepared mind.

Fri, 02/17/2012 - 11:30 | 2169586 narapoiddyslexia
narapoiddyslexia's picture

Agree. Just installed 4kw solar PV on the roof and 3k gal rain water cistern. 

Fri, 02/17/2012 - 11:32 | 2169594 narapoiddyslexia
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Paid for, btw, with some of the profits I made on my 2010-2011 silver ETF trades, executed after discovering this web site.

Fri, 02/17/2012 - 11:41 | 2169637 LawsofPhysics
LawsofPhysics's picture

Same idea for me, btw, the government now considers such actions typical of a "terrorist". 

Fri, 02/17/2012 - 12:01 | 2169755 HoofHearted
HoofHearted's picture

God bless you terrorists. Most of the country would be dead of starvation without you.

Fri, 02/17/2012 - 10:03 | 2169142 AccreditedEYE
AccreditedEYE's picture

If you like this wait till you see what's coming as this gives the QE-addicts another "all clear" signal for launch of the next bond buying binge.  

Fri, 02/17/2012 - 09:47 | 2169091 The Swedish Chef
The Swedish Chef's picture

That transient weather making a guest apperance again!

Fri, 02/17/2012 - 09:49 | 2169099 mc_LDN
mc_LDN's picture

No no - its the US secret weapon - HAARP!

 

He who controls weather controls the world economy.

 

Global warming - bitchez!!

Fri, 02/17/2012 - 09:54 | 2169109 TheFourthStooge-ing
TheFourthStooge-ing's picture

The weather, like the economy, is a non-linear dynamic system. Attempts to control the economy have yielded wonderful results for the benefit of mankind, and we can look forward to the same results and benefits from attempts to control the weather.

 

Fri, 02/17/2012 - 10:18 | 2169198 GoldenTool
GoldenTool's picture

Kissinger: "Control oil and you control nations; control food and you control the people."  

 

Food is dictated by weather, most times...

Fri, 02/17/2012 - 09:51 | 2169100 firstdivision
firstdivision's picture

How is Ben Bernake going to justify QE3 when core is at target?  I cannot wait to see if they are going to make up an excuse, or just do it without any argument.

Fri, 02/17/2012 - 09:55 | 2169110 Stoploss
Stoploss's picture

Because deflation is the most powerful economic force. He will never exceed the target, he will have even more trouble maintaining it now. Ever wonder why, after all the monetization, Ben can't even get inflation to register on the guage??

Fri, 02/17/2012 - 10:01 | 2169139 Gully Foyle
Gully Foyle's picture

Stoploss

"Ever wonder why, after all the monetization, Ben can't even get inflation to register on the guage??"

Hey now citizen I have an answer to that, simply apply Zeno's Paradox of Achilles and the Turtle.

Fri, 02/17/2012 - 10:09 | 2169173 SheepDog-One
SheepDog-One's picture

Theyre managing a 'suspension of disbelief' market for the time being, but eventually reality will definitely come crashing back in. I dont thing it will be very long at all from now, they already own basically all of the bonds and equities, doesnt matter what price the central banksters 'paid' because they bought it all with fake money anyway. 

Fri, 02/17/2012 - 10:36 | 2169264 Dr. Engali
Dr. Engali's picture

I guess your point would be true if the numbers were accurate. But we all know that he inflation numbers are an out right lie because they don't count the things we need like food and energy. As for the items that are deflating like housing and flat screens, well how many of those are people going to buy? And don't get me started on hedonic regression.

Fri, 02/17/2012 - 10:54 | 2169331 GeezerGeek
GeezerGeek's picture

I wish inflation would stop registering at the cash register. Ben's guage emphasizes the wrong things. What we need in addition to all the other statistics is a "Cost of Getting By" indicator.

Fri, 02/17/2012 - 10:04 | 2169154 Dr. Engali
Dr. Engali's picture

He can't. He just isn't going to announce it. They will continue to qe 2.55555555555 through the back door.

Fri, 02/17/2012 - 10:05 | 2169160 SeattleBruce
SeattleBruce's picture

We're into QEglobal right now...and the reason the needle isn't moving for Benny is that the economy is still trying to overcome a huge housing after bubble deflation, plus they manipulate the inflation measure - http://www.shadowstats.com/.  Look at inflation in other parts of the world through - like food commodities have hit people very hard.  None of that matters to Ben and the money masters.

 

End Debt Based money.

Fri, 02/17/2012 - 10:11 | 2169180 SheepDog-One
SheepDog-One's picture

Well all the bankers are really doing is transfering ownersip of all the govt bonds and a lot of equities to themselves, using your future 'money' to do it. Its all free to them, and theyre about done right now theres really no point in keeping this illusion going.

Fri, 02/17/2012 - 10:12 | 2169182 LawsofPhysics
LawsofPhysics's picture

debt-based money has a way of ending itself, just relax and hedge accordingly.

Fri, 02/17/2012 - 10:32 | 2169253 kridkrid
kridkrid's picture

So what's your list of appropriate hedges. if you don't mind me asking.  Clearly you have farm land and you are producing... which isn't terribly practical for me, unfortunately.  So let's say, hypothetically, you had something like $500k wrapped up in various retirement accounts and approximately $100k in cash.  What are you doing?  

Fri, 02/17/2012 - 11:19 | 2169472 LawsofPhysics
LawsofPhysics's picture

higher dollar rental units in areas where you know the status quo won't let property values or businesses fail.  Avoid buying real estate near SNAP-funded ghettos.  In addition, get creative.  Look at some of your own local busnesses that have solid busness models that that everyone around you depends on.  find out who may need a little capital and inquire as to a percentage of net as a private investor.  you be suprised what you might find out.  The bottom line is have cash or some PMs to move about and turn into revenue streams as all the paper begins to fail.  For example, I took about 100K and helped out a local micro brewery a while back.  They are no longer a "micro" brewery having passed the 20,000 barrel production mark.  That investment is producing revenue that will pay off 10x over the next five years (sat for almost 8 doing nothing).

The best part is, even if the dollar goes to zero I can get paid in beer, which keeps my emploees happy and is a great bartering chip- get the idea now?

Fri, 02/17/2012 - 10:07 | 2169165 disabledvet
disabledvet's picture

Will the farmer complain if the bank and trucking company go down in flames together? I wish I could say no. It was a Pennsylvania dairy farmer who taught me how to drive "the big thing." Great guy. No better person to have in your corner...for anyone. As he said to me "George...I'm sixty, still flat broke and still living with my parents."

Fri, 02/17/2012 - 10:17 | 2169196 LawsofPhysics
LawsofPhysics's picture

"Will the farmer complain if the bank and trucking company go down in flames together"

---------------------------------------------------------------------------------------------------------------------------

As part of a large co-op that delivers product to a number of countries. My response is "no".  Perhaps a better question to ask will be "Who will still be eating fresh food when the bank and trucking company go down in flames together".

We do some organic farming and while production would take a big hit we could still produce something, with little debt hanging over my operation, the bank can fuck themselves.  I'll eat the good food and sell them what is left at a much higher price.  many of us in this co-op are also active or retired military, so I think we got this  covered.

water finds it's own level, relax and hedge accordingly.

Fri, 02/17/2012 - 09:49 | 2169101 rodocostarica
rodocostarica's picture

Medical care up up 3.7% YOY? Complete Bullshit.

Fri, 02/17/2012 - 09:52 | 2169106 francis_sawyer
francis_sawyer's picture

I cut my finger last year and needed 4 stiches... $630 was the bill...

Fri, 02/17/2012 - 10:03 | 2169145 Eally Ucked
Eally Ucked's picture

Hedonically adjusted obstetrician is called now midwife, in your case you should've used local clothing alternation business and your costs would been much lower. 

Fri, 02/17/2012 - 10:04 | 2169153 francis_sawyer
francis_sawyer's picture

@EU

I swear if it happens again I'm just going to stitch it up myself with a sewing kit... Gotta get my hands on some morphine first...

Fri, 02/17/2012 - 10:03 | 2169147 francis_sawyer
francis_sawyer's picture

Worse... It's still numb in the fingertip (but not nearly as numb as my wallet)...

Fri, 02/17/2012 - 10:13 | 2169183 SheepDog-One
SheepDog-One's picture

I walk around praying theres no small medical issue that I'll have to deal with...like you say 15 minutes with a doctor will cost you thousands.

Fri, 02/17/2012 - 10:54 | 2169333 francis_sawyer
francis_sawyer's picture

In a minute you're going to think I'm a walking ambulatory case, but just about 3 weeks ago I tore some cartilage in what (used to be) my good knee (the other one, all the meniscus is long gone after arthroscopic surgery)...

Anyway ~ Long story short... I didn't need a fucking $8,000 MRI report (I know what torn cartilage feels like)... My other knee is no better now than after I had the scope (& it was done by competent Italian sports doctors who do pro soccer players all the time)...

So I'm just going to let it go (as I'd done with the other one for many years)... Now I have two weather vanes instead of one...

Fuck doctors! (oh ~ but I'm sure 'Obamacare' is going to help things... barf)...

 

Fri, 02/17/2012 - 10:03 | 2169149 Gully Foyle
Gully Foyle's picture

francis_sawyer

"I cut my finger last year and needed 4 stiches... $630 was the bill..."

You know you can just superglue that shit. Superglue was invented for battlefield repairs to minor injuries.

Fri, 02/17/2012 - 10:06 | 2169164 francis_sawyer
francis_sawyer's picture

I do know that (because the year before I gashed the heel of my hand and did just that)...

This time was different, I practically cut the top of my 'ringfinger' off ~ it was 'a hangin...

Fri, 02/17/2012 - 09:56 | 2169115 Cult_of_Reason
Cult_of_Reason's picture

Core CPI is as high as it was in 2008, right before the market plunged.


Fantastic job Bernanke!

Fri, 02/17/2012 - 10:02 | 2169118 MFL8240
MFL8240's picture

 

More disingenuous propaganda from the clown show in DC, the bullshit never stops except for foreigners that see through our lies.  

Fri, 02/17/2012 - 10:04 | 2169156 SheepDog-One
SheepDog-One's picture

As long as 'core voter base' is 'happy', otherwise known as wards of the state living on various govt checks, what do prices matter or inflation? All that matter is placating the sheeple, because none of the rest will do anything to upset the apple cart. 

Fri, 02/17/2012 - 09:57 | 2169122 spastic_colon
spastic_colon's picture

good thing nobody uses energy or food

Fri, 02/17/2012 - 10:01 | 2169138 MFL8240
MFL8240's picture

All part of the ongoing lies.

Fri, 02/17/2012 - 09:58 | 2169124 stickyfingers
stickyfingers's picture

Energy prices are headed higher  - regardless of the weather. They answer to a higher power.

Fri, 02/17/2012 - 10:03 | 2169150 MFL8240
MFL8240's picture

Food and Energy are excempt from the CPI.

Fri, 02/17/2012 - 09:58 | 2169128 DavidC
DavidC's picture

Bernanke won't have ANY need to QE until the Dow is back around 10,000. All he needs to do is hint, the markets stay up and he doesn't NEED to do anything. Particularly when the ECB and IMF are helping him with their own balance sheet expansions in cahoots with the Fed (Dollar swaps anyone?).

DavidC

Fri, 02/17/2012 - 10:05 | 2169161 fonzannoon
fonzannoon's picture

When operation twist ev eryone's balls is over in June if the Dow is not at 10,000 and he actually takes 5 minutes off from buying treasuries you will see price discovery hit like you never have before. Knowing that QE3 is coming everything else be damned.

Fri, 02/17/2012 - 10:21 | 2169212 DavidC
DavidC's picture

fonzannoon,
Spot on. He's painted himself into a corner and there's no way out. He HAS keep this going indefinitely (which just isn't possible).

DavidC

Fri, 02/17/2012 - 10:00 | 2169132 surf0766
surf0766's picture

Yesterday Greek hope rally number 359 was completed. Today Greek hope rally number 400 is queued up.

 

Fri, 02/17/2012 - 10:01 | 2169133 Dermasolarapate...
Dermasolarapaterraphatrima's picture

Health Insurance up 12% and tuition up 8% and CPI up only 0.2%

 

VooDoo economics

Fri, 02/17/2012 - 10:09 | 2169171 SeattleBruce
SeattleBruce's picture

Your wallet, and my wallet, and everyone's direct experience doesn't matter - what matters is what the government tells us is true.  /massive sarc

Fri, 02/17/2012 - 10:00 | 2169137 Village Smithy
Village Smithy's picture

A new reality needs to be recognized here. 5 or 10 years ago this kind of inflation was acceptable because it was always accompanied by an increase in income. This just isn't the case anymore, that 2.9% is just taking a direct bite out of discretionary(if you have any of that left) and savings. We are so f-----.

Fri, 02/17/2012 - 10:10 | 2169175 SeattleBruce
SeattleBruce's picture

True dat.  Especially with ZIRP firmly ensconced for a decade or two?

Fri, 02/17/2012 - 10:01 | 2169141 monopoly
monopoly's picture

Oil the one to watch. You get a $4.00 average gas price nationwide, that will make a difference in this market.

Fri, 02/17/2012 - 10:14 | 2169188 adr
adr's picture

Something very screwey has been going on at gas stations in my area. In the face of climbing wholesale prices, the average cost by me has been going down. Last night the price was $3.17 down from $3.25 and down from $3.45 last week.

The only thing I can think of is demand is so poor, the stations can't sell the gas they took delivery of.

Fri, 02/17/2012 - 11:11 | 2169461 moondog
moondog's picture

$3.17? Wow! Cheapest gas in my area is $3.77. You must live in the NW (Colorado perhaps?).

http://www.denvergasprices.com/Price_By_County.aspx

I really hate living in such a heavily taxed state.

Good place to find cheapest gas in your area -->http://gasbuddy.com/

Fri, 02/17/2012 - 10:04 | 2169155 Monedas
Monedas's picture

Warm Fusion !  Monedas  2012  It just sounded good ?

Fri, 02/17/2012 - 10:04 | 2169157 SDRII
SDRII's picture

another 6T of fake US Treasury bonds siuezed in Zurich.....Bloomberg

Fri, 02/17/2012 - 10:06 | 2169162 Yen Cross
Yen Cross's picture

Damn, I need a bigger neck brace. This ( market), whip lash is killing me!

Fri, 02/17/2012 - 10:08 | 2169166 adr
adr's picture

Hmmm, on the unadjusted side I see almost every item up over 2% with an overall average of 6%. Sorry, I don't see .2% anywhere.

The first order of business should be to ban seasonal manipulation from government statistics. So far my personal inflation guage for 2012 is up 20%. My water bill is up 15% and my health insurance went up 5%. When gasoline ads $1 we can add that double digit percentage gain as well. I can go to any store and find items that are up 30% from Dec of last year.

Over the past 5 years true inflation has been running 25-30% a year. Nearly everything you buy daily costs double what it did in the mid 2000s. Triple what it did in the 90s.

There isn't a bigger lie than the government inflation report.

Fri, 02/17/2012 - 10:12 | 2169181 SeattleBruce
SeattleBruce's picture

"I can go to any store and find items that are up 30% from Dec of last year." - or the packaging and weights are slowly reduced for the same price...

Fri, 02/17/2012 - 10:32 | 2169255 Jim B
Jim B's picture

Agree, I used less natural gas, but I don't think they lowered the price! 

PS.  Bought several boxes Bunn coffee filters last weekend, up to $1.88 from $1.03 about 6 months ago.

Ben Bernank, you are a criminal working for the banks!

 

Fri, 02/17/2012 - 12:09 | 2169312 moondog
moondog's picture

Yes, the government has been lying...erm...misrepresenting many economic statistics for years. Much like main stream media, they have an agenda to push. I look at their statistics like I do MSM, BS propaganda. Goebbels would be proud.

Truthful money supply, inflation, unemployment, GDP, and dollar index data can be found here:

http://www.shadowstats.com/

Edit: Sorry about the repost of shadowstats...I just saw that SeattleBruce mentioned the same site earlier.

 

Fri, 02/17/2012 - 10:10 | 2169176 Monedas
Monedas's picture

Only one of every ten condoms made actually gets used as it was intended !  Monedas  2012  I make some of this shit up ! You decide !

Fri, 02/17/2012 - 10:17 | 2169195 frosty zoom
frosty zoom's picture

hedonic adjustments.

they make excellent blankets, fruit loops, tuques, reading glasses, frizbeez...

 

 

Fri, 02/17/2012 - 10:16 | 2169178 Shizzmoney
Shizzmoney's picture

TPTB REALLY lucked out this year, especially in the Northeast.  It has kept the consumer afloat, allowing them to take the money they usually would of had to spend on heat towards retailer McStuff.  On top of that, the States (who got their heating assistance funding slashed by the Federal Gov) weren't forced by their constituients to do something about the rising heat costs because, well, it hasn't been cold!

Part of the huge deficits States ran up last year was due to the enormous amount of snow we got, especially in places like D.C. where they really can't handle a 30 inch snowstorm as effectively as NYC or Boston (because plowing companies charge more due to lack of demand/competition).  Towns in MA easily ran up $1+ million debts not only from snow removal, but also due to property damage, paying school employees OT for extra days (to make up for snow days lost), as well as the lost tax revenue (due to people being discouraged to shop in inclement weather).

This year, the Gas companies, who have been whining all year here in Boston (the warmest winter I can remember living here), were the big losers.  I've had to turn my heat on less than 10x this year. 

They WILL make that difference up, whether it is at the pump, or in your electric bill.

Fri, 02/17/2012 - 10:28 | 2169233 adr
adr's picture

Even though the price of nat gas collapsed last year, most of the suppliers didn't cut rates at all.

Last year I paid $5.65 per mcf for gas on a contract. This year I went on the variable rate and the best I got was $5.42 per mcf. On the energy choice chart the best rate you can get is $4.87. Even if you pay that the overall bill will still be higher because usage charges went up $.65 per mcf over last year.

It doesn't matter what the wholesale price of an item is. Our state of facism will ensure you always pay more. Deregulation was supposed to lower prices, but it actually tripled them. Dominion colluded with the state legislature to raise nearly every charge allowed causing bills to skyrocket. I know because I still have gas bills saved from 2002.

Prior to energy choice:

Dominion base charge - $5
Nat gas - $2.39 per mcf
Usage and delivery charge - $.25 per mcf

Post energy choice

Base charge - $25
Nat gas - $5.42 per mcf
Usage and delivey - $1.75 per mcf

When the furnace wasn't running I used to pay $9 a month to run my water heater. Now that same bill is $35. THANK YOU ELECTED REPRESENTATIVES!

Fri, 02/17/2012 - 11:11 | 2169464 Shizzmoney
Shizzmoney's picture

Nevermind the utility companies are merging left and right.  NSTAR just bought Northeast Eletric today.

Gonna be GREAT for consumers.

Fri, 02/17/2012 - 10:45 | 2169282 Ostapuk Ivano
Ostapuk Ivano's picture

Where has that piker Leo been?

Fri, 02/17/2012 - 10:45 | 2169283 Ostapuk Ivano
Ostapuk Ivano's picture

Where has that piker Leo been?

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