Thursday, September 09, 2004

More silliness about the "threat" of inflation from Rueters today.
Soaring petroleum prices pushed the cost of goods imported into the United States much higher than expected in August, a government report showed on Thursday, suggesting inflation pressures may be building.

Import prices rose 1.7 percent last month following an upwardly revised 0.3 percent gain in July, the Labor Department said, marking the largest monthly increase since a matching jump in February 2003. Wall Street had forecast a milder 0.7 percent advance after July's originally reported 0.2 percent rise.
Sure, import prices for August were up a big 1.7%, but it's almost all due to the wild oil ride the world was on last month. Non-petroleum imports rose just 0.4%. Wood and mineral prices are rising quickly, but manufactured goods import prices are more or less flat. In fact, import prices on capital goods and consumer goods (including autos) did not change at all from July, and that's over two-thirds of the index. Capital goods and consumer goods (excepting autos) import prices have been falling since March 2004, while autos have been steady since June.

There is even a sector -- food -- in which prices are crashing. Import prices on agricultural foods, feeds and beverages changed -0.3% and have fallen three of the past four months. On the export side, ag prices are completely in the tank: -9.9% in August! Since peaking in May, ag export prices have fallen 15%.

So we may see more inflation pressure on producers, but there is clearly still a lack of consumer power both in the US and especially in the world to make inflation worth fretting over.

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