Friday, April 11, 2008

Inflation surging?

Talking about inflation. One would guess there won't be many left who still believe that recent Fed actions coupled with stratospheric oil prices can be ignored. I hear the gold bugs cheering.

Japan's corporate goods price index rose 3.9 percent in March from a year earlier, the fastest pace in 27 years, due to surging commodity prices, the Bank of Japan said on Friday. The import price index, in contract currency terms, was up 21.6 percent from a year ago after rising a revised 21.3 percent in February. It increased 2.0 percent from the previous month.

The index of wholesale prices has risen well above expectations in Germany in March from the same month last year, posting the highest jump in more than 10 years. Wholesale prices have posted a 7.1% increase in March, following a 6.0% rise in February, and well above the 6.0% increase expected by the market.

In the US the import price index surged 2.8 percent in March pushing the year-on-year rate to 14.8 percent and its worst level in more than 25 years of data. The pressure is deep and widespread with non-petroleum import prices up a record 1.1 percent. The year-on-year rate for the category is +5.4 percent, still in the single digits but extending a rising trend and the worst reading since the mid 90s.

According to the University of Michigan Mid-Apr consumer sentiment index one-year inflation expectations were at 4.8%, the highest reading since October 1990, up from the prior month's 4.3%, while the five-year inflation reading was 3.1%, also up from 2.9% in March. In January 2007 both readings were at 3.1%.

read also: Infaltion expectation outside comfort zone

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