Wednesday, April 19, 2006

Consumer Prices Climb

From the AP:
Consumer Prices Climb 0.4 Percent in March

Consumer prices shot up by a bigger-than-expected amount in March, reflecting higher costs for gasoline, clothing and hotel rooms.

The Labor Department reported that its closely watched Consumer Price Index rose by 0.4 percent, far higher than the modest 0.1 percent gain in February. The inflation surge was led by higher gasoline prices, which jumped by 3.6 percent.

With oil prices climbing to record levels above $70 per barrel this week, analysts said motorists should be braced for more pain at the pump in coming months.

Core inflation, which excludes food and energy, posted a 0.3 percent rise in March. It was the biggest gain in core inflation in a year and could be a worrisome signal that higher energy prices are starting to spill over into more widespread inflation pressures.

Through the first three months of this year, overall inflation has been rising at a 4.3 percent annual rate, far above the 3.4 percent price increase for all of 2005. The price acceleration reflected rising energy prices, which are up 21.8 percent at an annual rate through March, compared to a 17.1 percent rise for all of 2005.

From Bloomberg:
U.S. March Consumer Prices Rise 0.4%; Core Index Rises 0.3%

Prices paid by American consumers rose 0.4 percent in March as the cost of gasoline jumped, a government report showed. Excluding food and energy, prices rose the most in a year.

The rise in the consumer price index followed a 0.1 percent increase in February, the Labor Department said today in Washington. Not counting food and energy, so-called core prices rose 0.3 percent, more than expected and the biggest jump since March 2005, after a 0.1 percent February gain.


Anonymous Anonymous said...

Inflation is low? Right?

Health insurance premiums only up double digits every year the last 8 years, property taxes rising id to high single digits, college up 7-8% a year cable bills up 5-6% a year, gas / energy rocketing up

4/19/2006 07:47:00 AM  
Blogger grim said...

Anyone else getting a headache from trying to keep an eye on the inflation and Fed Rate Hike yo-yo?


4/19/2006 07:53:00 AM  
Blogger Metroplexual said...

And the outright lie that there is low inflation. It is not just a headache but the ache is down there from taken it in he you know where. Nothing makes sense to me anymore.

Is it me or is the stock market reacting way too prematurely to the minutes of FOMC released yesterday? Between now and the May meeting all kinds of info will be produced and the 0.4% rise in CPI last month should be an indicator that inflation is not tamed. For that matter, how much longer can the CPI be BSed with the fake numbers? Real inflation is way higher.

4/19/2006 08:29:00 AM  
Blogger chicagofinance said...

Nothing changed from yesterday morning to this morning, other than a 2% rally in the stock market.

All that there is now is evidence that a discussion took place where people had differing opinions.


4/19/2006 09:03:00 AM  
Blogger grim said...


Could you use the VIX as an indicator or proxy of 'market reaction' in cases like this?


4/19/2006 09:49:00 AM  
Anonymous Anonymous said...

about a trillion in hedge fund money chasing markets. It's like a wave it flows in then flows out in mass. Chasing performance could cause some huge spikes in either direction.

4/19/2006 10:01:00 AM  
Blogger chicagofinance said...

grim said...
Could you use the VIX as an indicator or proxy of 'market reaction' in cases like this?
10:49 AM

In theory it is comforting to have a metric to which you can point. However, it is quite specific in both significance and use. Also, it is not widely accepted as an indicator of that kind of sentiment.

What one could do is have a basket of metrics, and use them in tandem to draw conclusions.

I have a love-hate relationship with every metric out there. There is no magic number, because every time you find one, you eventually will find enough data to prove it’s not as rigorous as you had previously assumed.

Financial theory is based on a normal distribution in stock returns, which is known to be false due to kurtosis and skewing.

But it's the best we got.

====Gotta hate pricing where you have to rely on a "fudge" to plug up the hole - i.e. implied volatility========

4/19/2006 10:52:00 AM  
Blogger Richard said...

i find the whole inflation thing funny. if you work for a fortune 500 you most likely get pretty much the same raise every year whether inflation is at 10% or 1%. with inflation on the rise the purchasing power of your dollars are shrinking because your employer isn't indexing your salary to inflation are they? i know mine isn't so the only way i 'get ahead' with the fed raising rates is if i have inflation adjusted investments or savings where i earn interest. whoopie.

4/19/2006 11:43:00 AM  
Blogger chicagofinance said...

for y'all AMT-buffs:

Some people use their home-equity line of credit to buy a car for their personal use, or to pay for other personal expenses. But if you're subject to the AMT, that interest won't be deductible for AMT purposes, says TurboTax.

4/19/2006 11:48:00 AM  
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