With the Fed on hold with its ZIRP policy indefinitely, more than a few investors are worried about the prospects for inflation down the road. While the traditional inflation based statistics of the CPI and PPI are often criticized for understating actual price levels, one indicator that investors will want to keep an eye on is the monthly ISM commodity survey where participants are asked which commodities are up and down in price over the last month.
In this month's survey, manufacturers reported rising prices in eleven commodities and declines in five. This represents the second straight month where more commodities were rising in price than falling, and keep in mind this data was collected before the most recent round of easing by the Fed. Over the last three months the average net monthly number of commodities rising in price has been +1.7. While this represents a four month high, it is still well off the high reading of 9.3 that we saw in April and May.