Remembering Inflation

How quickly things change. Only six months ago everyone was fretting over how the spike in oil and commodity prices might cause hyperinflation. Now deflation is a bigger worry. The OECD’s latest monthly inflation statistics illustrate the reversal in fortune:

Consumer prices in the OECD area rose by 3.7% in the year to October 2008, compared with 4.5% in the year to September 2008. Month-on-month, prices fell 0.3% in October, after remaining stable in September.
Consumer prices for energy were up by 12.3% in the year to October, compared with 18.9% in September and consumer prices for food by 6.5% compared with 6.8% in September.

Excluding food and energy, consumer prices rose by 2.2% in the year to October, compared with 2.4% in September.

What is remarkable is how the inflation rate excluding energy and food has remained very stable at close to 2% for the last 5 years. With lower oil prices still working their way through the system, another decline is likely for November. And given the economic weakness in virtually all OECD countries, the rate seems destined to break below 2% and go even lower in coming months.

Comments

[herbert hoover:]

With the way the Fed is printing money, inflation will be an issue very, very shortly. Save this column for your grandkids. They'll enjoy the laugh

2008 Dec 02 01:04 PM

[patio:]

The Fed is pushing a noodle. No one is lending, and no one is borrowing. Inflation is not comng back very, very , shortly, or any other kind of shortly.
There has been no increase of the velocity of money, just the opposite, and every fundamental we have will keep it that way. We're tapped out- no one is spending, borrowing, and the credit card folks are lowering 2 trillion in caps.
That there is called deflation, son.


On Dec 02 01:04 PM Herbert Hoover wrote:

> With the way the Fed is printing money, inflation will be an issue
> very, very shortly. Save this column for your grandkids. They'll
> enjoy the laugh

2008 Dec 02 02:56 PM

[Robert Nabloid:]

Patio, patio. Time is on our side, not yours. They just increased the monetary base of money by over 75% in six weeks and they aren't done. That will affect things. Maybe not today or tomorrow - but it will come into the equation sooner or later.


On Dec 02 02:56 PM patio wrote:

> The Fed is pushing a noodle. No one is lending, and no one is borrowing.
> Inflation is not comng back very, very , shortly, or any other kind
> of shortly.
> There has been no increase of the velocity of money, just the opposite,
> and every fundamental we have will keep it that way. We're tapped
> out- no one is spending, borrowing, and the credit card folks are
> lowering 2 trillion in caps.
> That there is called deflation, son.
>
>
> On Dec 02 01:04 PM Herbert Hoover wrote:

2008 Dec 02 04:31 PM