The Labor Department released its CPI numbers for the month of February this morning. Guess what? Even the statistical gymnastics employed by these masters of illusion could not conceal what has been happening to food prices since the middle of last year. Ask any average US housewife and you would have already known this long before the CPI revealed it but the doubling of grain prices, the surge in wholesale beef and pork costs, rising prices for cotton, etc, were bound to show up sooner or later at the retail level.
As said many times here, a business can only absorb rising wholesale costs for so long. If it wants to remain in business, it must eventually pass these increases on to consumers, especially if it intends to actually increase its hiring.
While some food costs are coming down on the futures markets due to events in Japan and the exodus of a significant amount of speculative demand, it is reasonably sure that as long as the QE comes from the Fed and now more than likely from Japan, inflation in food and energy prices is not going to go away anytime soon.
Consider also the fact that the US Dollar continues to fall on the foreign exchange markets. This is going to have the effect of making imported goods more expensive for American consumers.
Consumer prices rise 0.5 pct., most since June ’09
Higher gas and food costs push up consumer prices up 0.5 pct., most in nearly 2 years
On Thursday March 17, 2011, 11:04 am EDT
WASHINGTON (AP) — Americans paid more for food and gas in February, driving up consumer prices at the fastest pace in nearly two years.
The Consumer Price Index rose 0.5 percent in February, the largest increase since June 2009, the Labor Department said Thursday. Core prices, which exclude food and energy, rose only 0.2 percent, matching January’s gain.
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