Don't Be Fooled, Inflation Is Already Here

[Letsbereal]

Guest Post: Fed Trapped By Inflation
1 November 2011, by Lance Roberts of Street Talk Advisors (Zero Hedge)
http://www.zerohedge.com/news/guest-post-fed-trapped-inflation

Excerpt:

There will be NO announcement of QE 3 tomorrow. Why? Because the Fed has trapped itself into a corner.  

The first two rounds of Quantitative Easing (QE1 and 2) were viable for the Fed as inflation was running at deflationary levels in 2009 and at the bottom of their target range of 1-3% in 2010.

In both instances the implementation of asset purchase programs, which immediately juiced liquidity in the financial markets, had an immediate and pronounced effect on the level of inflation.

Today, with inflation currently approaching 4% on a year-over-year basis the Fed is not only outside its inflation mandate of 1-3% but any further cost pressures on the consumer is going to drive the economy into a recession.  

As we showed recently in our post on 3rd quarter GDP with food and energy consumer more than 23% of wages and salaries there is very little wiggle room for the average American.

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The consumer is tapped out, the economy is much weaker than the headline numbers suggest and without liquidity assistance from the Fed you can expect the recession to take hold in 2012.  

However, we might get surprised by the Fed as they have done it before. The real question is even if they do something will it be enough to offset the damage that has already been done.


Also See: Fed may hibernate until spring http://www.marketwatch.com/story/fed-may-hibernate-until-spring-2011-10-31

[Letsbereal]

China to face global inflation pressure in 2012
2 November 2011, Beijing (MarketWatch)
http://www.marketwatch.com/story/china-to-face-global-inflation-pressure-in-2012-2011-11-02

China still faces many challenges, including rising protectionism, global inflationary pressures and the ongoing sovereign debt crisis in Europe, China Vice Finance Minister Li Yong said Wednesday.

The world economy is slowing and excessive liquidity is likely to keep global inflationary pressures very high in the next year, which will cast a shadow on China's economic growth, Li said at a forum.

Li also said it will be difficult for China to seek a balance when restructuring the economy, because exports will likely decline due to slowing external demand, and further yuan appreciation would put exporters at a greater disadvantage.

"Economic growth, economic restructuring and price control remain tough tasks for us", he said, adding the macro control measures will continue to steer the domestic economy in the right direction.

The housing market will continue to be a big challenge, Li said, adding the government will try to rein in prices to prevent a crisis.

[Letsbereal]

China banking official says inflation remains high
2 November 2011, Beijing (MarketWatch)
http://www.marketwatch.com/story/china-banking-official-says-inflation-remains-high-2011-11-02

China's inflation remains elevated and the economy still faces many uncertainties, Zhou Mubing, vice chairman of the China Banking Regulatory Commission, said Thursday.

Speaking at a forum, Zhou also said the government needs to step up financial support for smaller businesses suffering from a credit crunch and weakening demand for exports.

He didn't elaborate.

China's consumer price index eased to 6.1% in September from a year earlier, slowing from August's 6.2% increase and July's 6.5% rise, which was the fastest in more than three years.

[Letsbereal]

Eurozone Producer Prices Increase In September
4 November 2011, (RTTNews)
http://www.rttnews.com/Content/AllEconomicNews.aspx?ID=1752319

Producer prices in Eurozone increased more than expected in September, data from Eurostat showed Friday.

The producer price index rose 0.3% month-on-month following a 0.2% decline in August. Economists were looking for a 0.2% rise.

Annually, prices rose 5.8% in September, at the same pace as in the previous month. This was also in line with economists' expectations.

Prices in total industry, excluding the energy sector, edged up 0.1% month-on-month, while rising 3.6% from a year earlier.

Producer prices of energy rose 1% on a monthly basis, while there was a 0.4% increase in producer costs of durable consumer goods.

The price index for non-durable consumer goods was up 0.1%.

Producer costs of intermediate and capital goods remained unchanged from previous month, the statistical office said.

[Letsbereal]

Chinese inflation drops sharply as IMF chief Christine Lagarde warns Asia to be prepared for 'instability'
9 November 2011, (Reuters - The Telegraph)
http://www.telegraph.co.uk/finance/china-business/8878261/Chinese-inflation-drops-sharply-as-IMF-chief-Christine-Lagarde-warns-Asia-to-be-prepared-for-instability.html

Excerpt:

China's annual inflation rate fell sharply in October to 5.5% in a further pullback from July's three-year peak, giving Beijing more room to fine-tune policy to help an economy feeling the chill of a global slowdown.

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China's leaders have begun talking in recent weeks about "fine tuning" macroeconomic policy to maintain economic growth, which slowed in the third quarter to 9.1%, its weakest in more than two years.

But they have also made it clear that stabilising prices and fighting inflation remain the top priority, so analysts rule out a rate cut or reduction in bank reserve ratios anytime soon.

Most evidence of the fine-tuning has so far been seen through tweaks to tax policy aimed at small and medium-sized businesses and some signs that bank lending to that sector of the economy - which supports 75% of China's jobs - could be relaxed.

"The best way of controlling price rises is to boost production," said Wen.

The premier also said Beijing would not loosen policies to rein in the red-hot property market, a report on the official Xinhua news agency said.

Wen said the construction of government-subsidised housing projects would help relieve some supply strains and ease housing inflation.

The latest data showed that food prices, a major source of inflationary pressure in China, rose 11.9% in October from a year earlier, the smallest annual increase since May.

But they fell 0.2% from September, the first decline since May.

"This indicates inflation pressure is indeed slowing," said Zhang Zhiwei, an economist at Nomura in Hong Kong, who said consumer inflation may drop below 5% in November.

----

While most analysts rule out an immediate cut in interest rates, there is more debate on when the central bank might reduce bank reserve ratios. At 21.5%, the RRR is at a record level for big banks.

Analysts at ANZ believe the economy is deteriorating so quickly that the PBOC could soon start to ease policy by reversing some of the nine hikes to RRR made in the tightening cycle that began in October 2010.

Annual economic growth rates have fallen for three straight quarters.

Analysts forecast growth would slow to less than 9% next year for the first time in a decade.

The country's big manufacturers ran at their slowest pace in October since early 2009, the latest private-sector survey of purchasing managers showed, though there were signs of smaller firms bouncing back and a sharp fall in factory-gate prices.

"We revise our 'selective' policy easing call to an 'outright' policy easing, meaning that in an imminent move, the PBOC will likely make a 50 basis point cut to the RRR for all banks, with a possible larger cut of 100 bps for small and medium-sized banks," ANZ said in a note to clients last week.

The bank cites signs of softness in the real estate market as being particularly important, given that Chinese banks tend to prefer land and property as loan collateral.

Real estate makes up about 20% of China's FAI, a primary driver of overall economic growth.

Fixed asset investment (FAI) growth rose 24.9%.

Industrial output climbed 13.2% in the first 10 months of the year.

[Letsbereal]

Bernanke: Fed has latitude to set inflation goal
10 November 2011, by Greg Robb - Washington (MarketWatch)
http://www.marketwatch.com/story/bernanke-fed-has-latitude-to-set-inflation-goal-2011-11-10

Excerpt:

Federal Reserve policy makers “have considerable latitude” to choose its long-term inflation goal, Fed Chairman Ben Bernanke said Thursday. Bernanke did not elaborate on the remark.

Some dovish Fed members believe the central bank should tolerate higher inflation for a period of time in order to help the economy recover to a stronger growth rate.

[Letsbereal]

Portugal's inflation soars on energy prices
11 November 2011, by David Roman - Madrid (MarketWatch)
http://www.marketwatch.com/story/portugals-inflation-soars-on-energy-prices-2011-11-11

Portugal's statistics agency said Friday inflation in the euro zone's poorest country soared in October as local energy prices continued their recent climb, the result of European Union-mandated austerity policies.

Portugal's consumer price index rose to 4.2% in October from 3.6% in September, the National Statistics Institute, or INE, said.

Portugal is currently implementing an austerity program in exchange for a EUR78-billion bailout from the E.U. and the International Monetary Fund.

In order to increase budget revenue, the government is bringing forward increases on electricity and natural gas originally planned for 2012.

On the month, consumer prices rose 1.1% in October, compared with a 0.8% increase in September.

On a European Union-harmonized basis, the statistics agency said Portuguese consumer prices rose 4% in October, up from 3.5% on the year in September.

[Letsbereal]

Friday Night Irony: According To The Fed, Just Over One More Year Of ZIRP Will Lead To 38.36% Annual Inflation
18 November 2011, by Tyler Durden (Zero Hedge)
http://www.zerohedge.com/news/friday-night-irony-according-fed-just-over-one-more-year-zirp-will-lead-3836-annual-inflation

Excerpt:

And according to the Fed, inflation would now, 2.5 years into ZIRP, realistically be running at about 17%.

Which incidentally is exactly where it is , at least for those who have not mutated sufficiently to be able to metabolize iPads and fly to and from work using their own pair of wings.

[Letsbereal]

Stephen Leeb - Expect QE3, QE4 and 40% to 50% Inflation
22 November 2011, by Eric King (King World News)
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/11/22_Stephen_Leeb_-_Expect_QE3,_QE4_and_40_to_50_Inflation.html

[Letsbereal]

Euro-zone inflation rate steady, above ECB target
30 November 2011, by Paul Hannon - London
http://www.marketwatch.com/story/euro-zone-inflation-rate-steady-above-ecb-target-2011-11-30

The annual rate of inflation in the 17 countries that share the euro was unchanged in November at a level well above the European Central Bank's target.

The European Union's official statistics agency Eurostat Wednesday said the annual rate of inflation was 3%, unchanged from October and in line with expectations.

It was well above the ECB's target of just below 2%.

That sets up a difficult decision for policy makers when they next meet Dec 8.

While there are clear signs that the euro-zone economy is slowing sharply as a result of the deepening fiscal crisis, inflation has remained stubbornly high.

The Organization for Economic Cooperation and Development on Monday said the euro-zone economy will likely contract this quarter, and urged the ECB to ease monetary policy.

But with no firm evidence that the inflation rate is falling, the ECB may find it difficult to justify a decision to follow its November rate cut.

However, the ECB will be comforted by the results of a monthly survey of businesses and consumers released by the European Commission Tuesday.

It found that consumers expect prices to rise less rapidly over the next 12 months than they did in October, while retailers and manufacturers also expected to raise their prices less rapidly than last month.

[Letsbereal]

Commercial insurance prices rise 2% in 3Q
13 December 2011, by Nathalie Tadena (MarketWatch)
http://www.marketwatch.com/story/commercial-insurance-prices-rise-2-in-3q-2011-12-13

Commercial insurance prices rose in the third quarter for the second straight period, but the increases aren't enough to keep up with reported claim cost inflation levels, according to a recent survey by consultancy firm Towers Watson & Co.


U.S. wholesale prices rise 0.3% in November - Higher prices of vegetables and chicken feed increase
15 December 2011, by Jeffry Bartash - Washington (MarketWatch)
http://www.marketwatch.com/story/us-wholesale-prices-rise-03-in-november-2011-12-15-845410

U.S. wholesale costs rose modestly in November as the price of food increased, mostly for vegetables and chicken.

The producer price index rose a seasonally adjusted 0.3% last month, the Labor Department said Thursday.

[Letsbereal]

Average cost of health care services on the rise
15 December 2011, by Mia Lamar (MarketWatch)
http://www.marketwatch.com/story/average-cost-of-health-care-services-on-the-rise-2011-12-15

The average cost of health care services covered by commercial insurance and Medicare appears to be on the rise, according to a report from S&P Indices.

Over the year ended October, the S&P Healthcare Economic Composite index recorded a 5.11% annual increase, marking a significant rise over the 4.74% annual growth rate posted in September.

Healthcare costs covered by commercial insurance increased by 6.91% over the year ended October, equaling the fourth consecutive month the annual rate has risen.

"Healthcare cost growth rates seem to be stopping, if not reversing, the downward trend we had seen since the spring of 2010," said David M. Blitzer, chairman of the index committee at S&P Indices.

Blitzer added that a close inspection of hospital costs shows recent increases have been driven more by increases on the commercial insurance side.

He noted that the difference could be due to a host of factors, including contractual reimbursement provisions and differences in utilization of medical insurance.

According to the report, Medicare claim costs in October rose to an annual rate of 2.39%, up from a September low of 2.03%.

[Letsbereal]

Colombia ups minimum wage by 5.8% amid inflation
16 December 2011, by Dan Molinski - Bogota (MarketWatch)
http://www.marketwatch.com/story/colombia-ups-minimum-wage-by-58-amid-inflation-2011-12-16

Excerpt:

--Next year's minimum wage increase is highest in four years

--Percentage increase puts monthly minimum wage at $293

--Colombian inflation near 4% for 2011

Colombia said its annual minimum wage increase will be 5.8% for 2012, the sharpest increase in four years and well above this year's 4% rise as higher inflation threatens to chip away at workers' purchasing power.

The percentage increase, announced by the government late Thursday after meetings with labor unions and business leaders, will increase the monthly minimum wage by $16 to $293 a month starting Jan. 1.

Annual consumer inflation this year is likely to end just below 4%, up from 3.17% in 2010 and 2% in 2009.

The rising inflation is due largely to an increase in food prices after record rainfall in late 2010 and throughout 2011 destroyed highways, bridges and crops.

[Letsbereal]

Brazil economists raise 2011 inflation view
19 December 2011, by Rogerio Jelmayer - Sao Paulo (MarketWatch)
http://www.marketwatch.com/story/brazil-economists-raise-2011-inflation-view-2011-12-19

Financial analysts and economists increased their inflation forecast for Brazil this year, but reduced their outlook for 2012, according to a survey published Monday by the Brazilian central bank.

The weekly survey put the inflation forecast for this year at 6.52%, up slightly from 6.5% in the previous week's survey.

On the other hand, respondents decreased their inflation forecast for 2012 to 5.39% from 5.42%.

The inflation estimates for both this year and next are above the central bank's 4.5% target.

The central bank's weekly survey tracks the views of 100 analysts and economists from banks and brokerages and reports the average of their expectations.

The average forecast for the benchmark Selic interest rate at the end of 2012 was maintained at 9.5%.

The average estimate for 2011 gross domestic product growth was reduced to 2.92% from 2.97%.

Respondents kept their GDP growth forecast for 2012 at 3.40%.

The average expectation for Brazil's debt-to-GDP ratio at the end of this year was maintained at 38.50%.

The forecast for this year's foreign trade surplus was raised to $29 billion from $28.77 billion. Analysts expect Brazil to post a current-account deficit of $54 billion at the end of the year.

Brazil's currency, the real, is expected to end this year at BRL1.80 to the U.S. dollar, the survey showed.

[Letsbereal]

Bill for basket of essentials soars 43 per cent in ten years
27 December 2011, by Daniel Martin (Daily Mail)
http://www.dailymail.co.uk/news/article-2078876/Bill-basket-essentials-soars-43-cent-years.html

Excerpt:

Ordinary families have been crippled by the rocketing cost of essential goods over the past decade, a report has found.

The price of basic purchases, such as food and fuel, soared by 43% over the decade from 2000.

These rising costs – far above general inflation – have already wiped out most of the gains in living standards made by families on low and modest incomes in the early 2000s, before the downturn began, according to research.

The analysis, commissioned by the Resolution Foundation think-tank, revealed the squeeze on living standards for ordinary households has been more severe  than previously thought.

It found 30% of working-age households now have incomes too low to afford the essential basket of goods.

It also showed that Labour’s stewardship of the economy may not have benefited ordinary families as much as the party had claimed.

Some household costs increased even more dramatically than the 43% average, according to the study.

Household fuel more than doubled in price during the 2000s and water bills increased by 63%, it said.

Report author Donald Hirsch, from the Centre for Research in Social Policy at Loughborough University, said:

‘This research shows the dramatic impact recent price increases have had on the ability of households to afford a minimum standard of living.

[Letsbereal]

Minimum Wage in U.S. Fails to Beat Inflation: Chart of the Day
28 December 2011, by Ilan Kolet and Bob Willis (Bloomberg)
http://www.bloomberg.com/news/2011-12-28/minimum-wage-in-u-s-fails-to-beat-inflation-chart-of-the-day.html

Excerpt:

Workers in the U.S. earning the minimum wage are worse off now than they were four decades ago.

The CHART OF THE DAY shows that after adjusting for inflation, the federal minimum wage dropped 20% from 1967 to 2010, even as the nominal figure climbed to $7.25 an hour from $1.40, a 418% gain.

The decline would have been worse if not for increases that took place from 2008 through 2010 in how much employers were legally obligated to pay.

Combined with more stable consumer prices, those adjustments helped trim the reduction in earnings from 41% at the end of 2007, following a decade of no change in minimum pay.

“Hardship is increasing for lower-income levels, and the minimum wage reflects those at the lower end of the payroll spectrum,” said Ellen Zentner, a senior economist at Nomura Securities International Inc. in New York.

“With those meager wages in place, it makes it hard to imagine families doing with even less.”

A jobless rate that has exceeded 8% since February 2009, the longest stretch of such levels of unemployment since monthly records began in 1948, is one reason why workers have little leeway to press for higher wages.

Adding in part-time workers who would prefer full-time jobs, and discouraged workers who would take a job if one were available, pushes the rate up to 15.6% as of November.

The loss of better-paying manufacturing jobs in the last three decades and the growth of service industries may be another reason why wages have failed to keep up with inflation, Zentner said.

Eighteen states and the District of Columbia have minimum wages above the federal level of $7.25 an hour, which is just over $15,000 per year for a full-time worker.

Eight states -- Arizona, Colorado, Florida, Montana, Ohio, Oregon, Vermont and Washington -- will increase their minimum wage by between 28 cents and 37 cents an hour on Jan. 1, according to the National Employment Law Project, a non-partisan, not-for-profit organization that conducts research on unemployment.

[Letsbereal]

German inflation tops three-year high in 2011: data
12 January 2012, (AFP)
http://www.france24.com/en/20120112-german-inflation-tops-three-year-high-2011-data

Inflation in Germany jumped to 2.3% for the whole of 2011, its highest level in three years and and above European Central Bank targets, according to the latest official data.

Soaring energy prices pushed the consumer price index for the eurozone's largest economy up by an annual average 2.3% last year, compared with 1.1% in 2010 and 0.4% in 2009, the national statistics office Destatis said in a statement, released on Thursday.

Excluding energy prices, German inflation would have reached only 1.3% last year, the statisticians calculated.

The European Central Bank aims to keep inflation in the 17-nation euro area close to but below 2.0%.

But inflation in Germany exceeded that level in every month last year, Destatis said.

Nevertheless, inflation has been slowing in the last few months of 2011: it stood at 2.1% on a 12-month basis in December alone, down 2.4% in November.

Using the EU's Harmonised Index of Consumer Prices or HICP, which is the ECB's inflation yardstick, the cost of living in Germany rose by an annual average 2.5% percent for the whole of 2011.

[Letsbereal]

British producer prices fall in December
13 January 2012, (AFP)
http://www.france24.com/en/20120113-british-producer-prices-fall-december-0

The prices of goods leaving Britain's factories surprisingly fell in December compared with November, confirming expectations that inflation is set to ease further this year, official data showed Friday.

Producer prices dropped 0.2% last month from November -- the first month-on-month decline since June 2010 -- as petroleum products, chemicals, drugs and machinery all fell, the Office for National Statistics said.

Compared with a year earlier, December producer prices rose 4.8%, down from 5.4% in November, the ONS added.

Analysts had expected factory prices to have risen by 0.1% on the month and 5.0% year-on-year.

"Today's figures confirm that disinflationary pressure in the economy is building," said Samuel Tombs, economist at research group Capital Economics.

Britain's 12-month inflation dipped to 4.8% in November from 5.0% in October, helped by lower food and petrol prices, and is forecast to fall back much closer to the BoE's 2.0% target during 2012.

[Letsbereal]

John Williams - Gold, Silver, Economy & Inflation
20 January 2012, by Eric King (King World News)
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/1/20_John_Williams_-_Gold,_Silver,_Economy_%26_Inflation.html

Excerpt:

Adjusted to pre-Clinton (1990) methodology, annual CPI inflation was roughly 6.3% in December 2011, versus 6.7% in November 2011, but up from 4.8% in December 2010.  

The SGS-Alternate Consumer Inflation Measure, which reverses gimmicked changes to official CPI reporting methodologies back to 1980, eased to about 10.6% (10.57% for those using the extra digit) in December 2011, from about 11.0% in November 2011, and up from 8.9% in December 2010.  

Annual average inflation here was 10.7% in 2011 versus 8.9% in 2010.

[Letsbereal]

Rickards: 2% public FED inflation target is fake – Real inflation target is 4%-6%

Listen to:

Jim Rickards, Saturday, January 28, 2012 on KWN – AUDIO http://kingworldnews.com/kingworldnews/Broadcast/Entries/2012/1/28_Jim_Rickards.html

[Letsbereal]

China consumer prices rise 4.5%, above estimates
8 February 2012, by V. Phani Kumar - Hong Kong (MarketWatch)
http://www.marketwatch.com/story/china-consumer-prices-rise-45-above-estimates-2012-02-08

China's consumer prices rose at a faster-than-expected rate of 4.5% in January from the year-ago period in a likely setback to expectations that Beijing may loosen its monetary policy in the near term.

The January consumer price index trounced expectations of a 4.1% increase estimated by economists and follows a decline in the rate in the recent past.

China's CPI rose 4.1% in December, 4.2% in November and 5.5% in October.

However, official data released Thursday also showed that China's producer-price index eased further, rising 0.7% during the month as compared to 1.7% in December.

Economists polled by Dow Jones Newswires had expected a 0.6% increase in January PPI.

Read the full story: China inflation heats up, casting doubt on policy http://www.marketwatch.com/story/china-inflation-heats-up-casting-doubt-on-policy-2012-02-08

[Letsbereal]

January producer price inflation eases less than forecast
10 February 2012, London (Reuters)
http://uk.reuters.com/article/2012/02/10/uk-inflation-idUKTRE8190HF20120210

British factory gate inflation dropped to its lowest in more than a year in January as input costs also rose at a much slower pace, data showed on Friday.

Output price inflation fell to 4.1% from 4.8% in December, its lowest annual level since November 2010, but the drop was smaller than economists had forecast, highlighting the risk that consumer price inflation may not fall as fast this year as the Bank of England is predicting.

[Letsbereal]

China's inflation jumps to three-month high
9 February 2012, (AFP)
http://www.rte.ie/news/2012/0209/china-business.html

China's annual inflation rate hit 4.5% in January, the highest level in three months, data showed today, after consumers splashed out on food and gifts over the Lunar New Year holiday.

The country's consumer price index, a key gauge of inflation, was higher than the 4.1% in December and ended five months of easing price pressures in a row - caused by government restrictions on lending and property purchases.

[Letsbereal]

U.S. import prices up 0.3% in January
14 February 2012, by Greg Robb - Washington (MarketWatch)
http://www.marketwatch.com/story/us-import-prices-up-03-in-january-2012-02-14

Import prices rose 0.3% in January, the second increase in the past three months, the Labor Department reported Tuesday.

The rise in import prices was not as large as expected.

Economists surveyed by MarketWatch were expecting import prices to rise 0.4% in January.

Import prices fell 0.1% in December after a 0.7% increase in November.

Over the past year, import prices are up 7.1%.

Imported fuel prices rose 1.0% in January after a 0.6% decline in the previous month.

Fuel prices are up 20.8% over the past year.

The price index for imports excluding fuel rose 0.1% after a 0.2% gain in December.

[Letsbereal]

Jan. CPI up 0.2%, core rate up 0.2%
17 February 2012, by Greg Robb - Washington (MarketWatch)
http://www.marketwatch.com/story/jan-cpi-up-02-core-rate-up-02-2012-02-17

The underlying rate of U.S. inflation accelerated by the fastest pace in four months in January, the Labor Department said Friday.

The consumer price index increased 0.2%, driven by the first increase in gasoline prices since September.

Food prices rose 0.2 % for the second straight month.

The core CPI index, excluding food and energy costs, was up 0.2% in January.

Economists were expecting the CPI to rise 0.3% in January after remaining flat in the prior month.

The core rate was expected to rise 0.2% after rising 0.1% in the previous month.

Read the full story: Gasoline lifts consumer prices 0.2% in January http://www.marketwatch.com/story/gasoline-lifts-consumer-prices-02-in-january-2012-02-17

[Letsbereal]

China's inflation still blocks easing: PBOC paper
16 February 2012, by China Bureau - Beijing (MarketWatch)
http://www.marketwatch.com/story/chinas-inflation-still-blocks-easing-pboc-paper-2012-02-16

Inflation concern is still the main obstacle to further loosening of monetary policy in China, a newspaper backed by the central bank said Friday, citing economists from foreign investment banks and other analysts.

In an analysis of the People's Bank of China's fourth-quarter monetary policy report released Wednesday, the Financial News said it revealed that concerns about inflation persist, and that it weakened market expectations for policy loosening, driving down China's domestic stock markets on Thursday.

The benchmark Shanghai Composite Index, which tracks both A and B shares, ended down 0.4%, or 9.84 points, at 2356.86 on Thursday.

Further cuts in the required reserve ratio for banks, the paper added, depend on the extent of capital inflows or outflows. In the past, the central bank has used hikes in the reserve ratio to offset capital inflows, but at the end of last year China began experiencing capital outflows.

The paper is not an official mouthpiece for the central bank, and it cited independent economists in it analysis, but nonetheless many market observers believe analysis articles that appear in its pages give a window into the thinking of PBOC officials.

The PBOC's monetary policy report on Wednesday warned that although inflation pressures have moderated, the central bank can't let its guard down against inflation risks.

Noting that January's consumer price index rise of 4.5% from a year earlier exceeded market expectations, the PBOC said that "inflation expectations are still unstable currently," especially due to tightness in markets for labor and other production inputs, and ample global liquidity.

Newspaper website: http://www.financialnews.com.cn

[Letsbereal]

Price hikes catch up to U.S. food makers
17 February 2012, by Matt Andrejczak - San Francisco (MarketWatch)
http://www.marketwatch.com/story/price-hikes-catch-up-to-us-food-makers-2012-02-17

U.S. brand-name food makers raised prices throughout 2011 and it’s starting to catch up to them.

[Letsbereal]

Canada January Inflation Unexpectedly Quickens to 2.5% on Food, Gasoline
17 February 2012, by Greg Quinn (Bloomberg)
http://www.bloomberg.com/news/2012-02-17/canada-january-inflation-unexpectedly-quickens-to-2-5-on-food-gasoline.html

Excerpt:

Canada’s inflation rate unexpectedly quickened in January as prices increased for every category except for leisure products, led by groceries and fuel.

The consumer price index rose 2.5% in January from a year earlier after December’s 2.3% gain, Ottawa-based Statistics Canada said. The core rate, which excludes eight volatile items, rose to 2.1% from December’s 1.9%. Economists surveyed by Bloomberg predicted both rates would stay at last month’s levels, according to the median of 24 estimates.

Bank of Canada Governor Mark Carney has said inflation will fall below his 2% target in the second quarter because the economy will continue to operate below its potential into next year. Inflation exceeded 3% as recently as September as Carney sought to boost growth by extending the longest pause in interest rates since the 1950s.

“Core CPI is still at a comfortable level for the Bank of Canada,” said Jimmy Jean, a strategist in the fixed-income group at Desjardins Capital Markets in Montreal. “We expect soft domestic demand and still elevated spare capacity to keep a lid on inflation in months to come.”

The Canadian dollar appreciated 0.1% to 99.57 cents per U.S. dollar at 9:53 a.m. Toronto time. Government bond yields rose including the two-year bond to 1.10% from 1.07%, the highest since October 28.

The cost of bread rose 9.9% from a year ago in January, Statistics Canada said, followed by an 8.3% rise in fresh vegetables and a 6.5% increase for meat.

Higher Energy Costs

Gasoline posted a 6.8% gain while electricity costs were 7.3% higher, Statistics Canada said.

WestJet Airlines Ltd., the discount carrier based in Calgary, reported a 4.3% drop in fourth-quarter profit on Feb. 8 as the average fuel cost climbed 26%.

Energy drove a 2.9% average increase in consumer prices last year, the fastest since the central bank adopted inflation targets in 1991. The bank forecast last month that inflation would slow to a 1.5% annual pace in the April- June period.

“It’s a still a bit of a dovish story,” said Derek Holt, Scotia Capital’s vice-president of economics in Toronto. “This restores some sanity to the print we had in the last report” when inflation slowed from 2.9% to 2.3%.

[Letsbereal]

[Letsbereal]

• Annual “Core” Inflation Rose for 15th Straight Month



• Year-to-Year January Consumer Inflation: 2.9% (CPI-U), 3.1% (CPI-W), 10.5% (SGS)



Inflation update:  “The SGS-Alternate Consumer Inflation Measure, which reverses gimmicked changes to official CPI reporting methodologies back to 1980, eased to about 10.5% (10.48% for those using the extra digit) in January 2012, from about 10.6% in December 2011.” http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/2/17_John_Williams__$8,890_Gold,_$517_Silver_%26_Hyperinflation_Update.html

[Letsbereal]

Buy Gold...schlager: Booze Inflation Highest In 20 Years
27 February 2012, by Tyler Durden (Zero Hedge)
http://www.zerohedge.com/news/buy-goldschlager-booze-inflation-highest-20-years

Booze Inflation but Deflation in Ammo.

Sounds like a perfect recipe for liquor store raids like in London the other day were the Brits didn’t even use the ammo lOlz

[Letsbereal]

Ron Paul To Ben Bernanke: "People Lose Trust In The Government Because You Lie To Them About Inflation"
29 February 2012, by Tyler Durden (Zero Hedge)
http://www.zerohedge.com/news/ron-paul-ben-bernanke-people-lose-trust-government-because-you-lie-them-about-inflation

[Letsbereal]

Euro-zone Feb. annual CPI seen rising to 2.7%
1 March 2012, by William L. Watts - Frankfurt (MarketWatch)
http://www.marketwatch.com/story/euro-zone-feb-annual-cpi-seen-rising-to-27-2012-03-01

Consumer prices across the 17-nation euro zone grew at a 2.7% annual rate in February, edging up from 2.6% the previous month, the European Union statistics agency Eurostat said Thursday in a preliminary estimate.

Economists surveyed by Dow Jones Newswires had forecast a 2.6% reading.

Inflation remains above the European Central Banks target of near but just below 2%.

[Letsbereal]

China economist tips uncertain inflation outlook
6 March 2012, Beijing (MarketWatch)
http://www.marketwatch.com/story/china-economist-tips-uncertain-inflation-outlook-2012-03-06

China is still facing uncertain inflationary factors, though inflation has been easing recently, prominent Chinese economist Li Yining said Tuesday.

Li, a member of the Chinese People's Political Consultative Conference, an advisory body that meets alongside China's legislature, said China would focus on the quality rather than the pace of economic growth this year.

Chinese Premier Wen Jiabao said Monday in his government work report to the National People's Congress, the country's legislature,

that the government aims to contain consumer price inflation around 4% this year.

China missed the 4% target for last year, with the consumer price index rising 5.4% over the year.

[Letsbereal]

Germany turns up pressure on ECB over inflation
10 March 2012, by William Boston - Berlin (MarketWatch)
http://www.marketwatch.com/story/germany-turns-up-pressure-on-ecb-over-inflation-2012-03-10

Growing more confident that the acute phase of the euro zone debt crisis may be passing, Germany is beginning to put pressure on the European Central Bank to start mopping up the extra cash that it has flooded into European markets to stem the spread of financial contagion.

A senior ally of Chancellor Angela Merkel called Saturday on the ECB to quickly get back to its anti-inflation mission and safeguard the stability of the euro currency.

"I hope that the ECB acknowledges its limits and quickly rakes in the money later," said Volker Kauder, the head of parliamentary group of Merkel's conservative alliance of Christian Democrats and its sister party, the Bavarian Christian Social Union, in an interview published in the business weekly Wirtschaftswoche on Saturday.

Kauder's warning follows similar comments made by Merkel at the most recent summit of European leaders on March 2. Responding to warnings by Brazil about a "tsunami of cheap money" flooding global markets, Merkel said during a news conference that she was certain that the ECB had now ended its program of issuing cheap 3-year loans to banks.

Merkel also reassured critics that ECB wouldn't repeat such measures again.

Through its 3-year-loan program, the ECB has pumped about €1 trillion into Europe's banks. As a result, the ECB's balance sheet now exceeds €3 trillion, about one-third of euro zone gross domestic product.

That, say analysts, is a bigger share of the euro zone economy than the Federal Reserve's balance sheet, which makes up 19% of U.S. GDP, or the Bank of England, whose balance sheet is equal to about 21% of U.K. GDP.

With the apparently successful conclusion of the Greek debt restructuring this week and positive reaction of financial markets to the second Greek bailout, Germany appears to be giving the danger of inflation following the massive ECB liquidity measures a higher priority than during the acute phase of danger during the euro zone debt crisis.

Merkel has said that European governments will have to continue fighting the crisis for years to come, but German officials are increasingly confident that Europe may be gaining the upper hand over the crisis.

The next step in the battle against the crisis will be to establish the European Stability Mechanism, or ESM, the euro zone's permanent bailout fund.

Germany sees setting up the fund as a robust firewall against contagion as the signal that the ECB needs to go back to business as usual and concentrate on its inflation-busting core mission.

"Then the ECB will be able to an must concentrate again on its task of being the stability anchor of monetary policy," Kauder told Wirtschaftswoche.

[Geolibertarian]

http://www.marketwatch.com/story/germany-turns-up-pressure-on-ecb-over-inflation-2012-03-10

Growing more confident that the acute phase of the euro zone debt crisis may be passing, Germany is beginning to put pressure on the European Central Bank to start mopping up the extra cash that it has flooded into European markets to stem the spread of financial contagion.

The problem is that when so-called "extra" cash is arbitrarily removed from circulation, the interest debt that was generated by the bank loans which brought all that cash into circulation in the first place is not only not reduced by a proportionate amount, but is allowed to keep right on compounding:

     http://forum.prisonplanet.com/index.php?topic=98465.msg1213174#msg1213174

The end result? The gap between the overall indebtedness of the economy (principal-plus-interest) and the amount of money there is in circulation to pay it off (principal) increases.

And what happens when that gap increases? More people are forced into bankruptcy, and the banks get to "mop up" (via foreclosure) all of those "extra" property holdings!

Austrian School ideologues euphemistically call this parasitic transfer of wealth a market-based "correction" or "adjustment." Objective observers, on the other hand, call it what it really is: a fraud-based looting of the real economy.

[Letsbereal]

Fed holds rates, says inflation rise is temporary
13 March 2012, by Steve Goldstein - Washington (MarketWatch)
http://www.marketwatch.com/story/fed-holds-rates-says-inflation-rise-is-temporary-2012-03-13

The Federal Reserve on Tuesday kept its interest rate target between 0% and 0.25% -- as it has since Dec. 2008 -- as the central bank said a rise in oil and gasoline prices will only "temporarily" push up inflation.

Inflation will then run at or below the rate most consistent with its dual mandate, the central bank said.

The Fed also maintained its Operation Twist program of shifting short-term bonds into longer-dated securities and reiterated the need to keep rates exceptionally low through at least 2014.

The Fed continued to describe the economy as "expanding moderately" though it has acknowledged for the first time that global financial market strains have eased.

As with the last meeting, there was one dissent, Richmond Fed President Jeffrey Lacker, who said he doesn't anticipate economic conditions are likely to warrant the exceptionally low levels through 2014.

Read the full story: Fed stands pat, downplays pickup in economy http://www.marketwatch.com/story/fed-stands-pat-downplays-pickup-in-economy-2012-03-13


ahahahaahaahahaahaha That’s what he said last time and the ultra low rates are also temporarely right!? LOlz

[Letsbereal]

Jump in India’s inflation dims rate-cut hopes - February gauge shows 6.95% increase; food prices back on the rise
14 March 2012, by Nick Godt - Mumbai (MarketWatch)
http://www.marketwatch.com/story/jump-in-indias-inflation-dims-rate-cut-hopes-2012-03-14

After falling to a 26-month low in January, inflation in India rose last month as a result of an increase in food prices, dimming hopes for prospective interest-rate cuts by the Reserve Bank of India.

The equities benchmark is up 16% since the start of the year, while India’s rupee has stabilized after sliding in the second half of 2011, which had also fueled inflation pressures.

Also problematic for the Reserve Bank and the government, crude-oil prices have jumped over the past several months. India imports and subsidizes most of its energy needs.

But fuel prices in India will likely be hiked as the government seeks to restrain “an otherwise ballooning subsidy bill,” according to HSBC’s Eskesen.

[Letsbereal]

U.S. import prices increase 0.4% in February
14 March 2012, by Jeffry Bartash - Washington (MarketWatch)
http://www.marketwatch.com/story/us-import-prices-increase-04-in-february-2012-03-14

Import prices rose 0.4% in February owing to a spike in oil, the Labor Department reported Wednesday.

It's the first increase in three months and biggest gain since April 2011.

Economists surveyed by MarketWatch were expecting import prices to rise 0.6%.

Import prices were revised lower for January and December to show no increase.

Over the past year, import prices are up 5.5%.

Imported fuel prices rose 1.4% in February - 1.8% for petroleum - after a flat reading in the prior month.

Fuel prices are up 15.2% over the past year.

Excluding fuel, the price index for imports fell 0.1% following a 0.1% gain in January.

[jerryweaver]

http://www.youtube.com/watch?v=SHhrZgojY1Q&feature=related