The big bad wolf has scared all the little pigs today with the latest CPI report.
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.6 percent in May, before seasonal adjustment, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The May level of 189.1 (1982-84=100) was 3.1 percent higher than in May 2003.Not only is the annual rate now over 3%, but the inflation rate over the last three months (annualized) is at a remarkable 5.5%. Of course, big surges in fuel costs are at the root of the latest price hikes. Over the past three months, energy prices are up an amazing 29.7%, with especially big jumps in January and May.
Most reporting on inflation today, however, sees the real underlying story. Inflation is restricted to a very limited number of sectors: energy, food and (as always) medical care and education. Food inflation, in fact, is mostly limited to meat and dairy, even further narrowing the inflation profile. And when it comes to manufactured goods, it's still all about overproduction.
Year-over-year, apparel prices are up a mere 0.7%; household furnishings, -0.7%; motor vehicles, -3.5%; information technology, -9.1%. Overall, durable goods prices are at -3.1% since last May, and all commodities minus food and energy commodities are -1.1%. The underlying logic of globalization is deflationary, and that logic continues to make itself felt despite all the froth on top.