Nine Years Ago, Oil Was Projected to Fall to Five Dollars

April 21, 2008
Nine Years Ago, Oil Was Projected to Fall to Five Dollars

Nine years ago The Economist ran a big story on oil, which was then selling for $10 a barrel. The magazine warned that this might not last. Instead, it suggested, oil might well fall to $5 a barrel.

In any case, The Economist asserted, the world faced “the prospect of cheap, plentiful oil for the foreseeable future."

Last week, oil hit $117.

Co-Payments for Expensive Drugs Soar

April 14, 2008
Co-Payments for Expensive Drugs Soar

Health insurance companies are rapidly adopting a new pricing system for very expensive drugs, asking patients to pay hundreds and even thousands of dollars for prescriptions for medications that may save their lives or slow the progress of serious diseases.

With the new pricing system, insurers abandoned the traditional arrangement that has patients pay a fixed amount, like $10, $20 or $30 for a prescription, no matter what the drug's actual cost. Instead, they are charging patients a percentage of the cost of certain high-priced drugs, usually 20 to 33 percent, which can amount to thousands of dollars a month.

The mounting cost of food

March 30, 2008
The mounting cost of food

Next time you restock your pantry, be prepared for sticker shock. The price of wheat has more than tripled during the past 10 months, making Americans' daily bread -- and bagels and pizza and pasta -- feel a little likAnd baked goods aren't the only ones getting more expensive: Experts expect about 80 percent of grocery prices will spike, too, and could remain steep for years because wheat and other grains are used to feed cattle, poultry and dairy cows.

"It's going to affect everything . . . impact on every section of the grocery store," said Michael Bittel, senior vice president of King Arthur Flour Co. in Norwich, Vt.

Surging costs of groceries hit home

March 9, 2008
Surging costs of groceries hit home

American families, already pinched by soaring energy costs, are taking another big hit to household budgets as food prices increase at the fastest rate since 1990.

After nearly two decades of low food inflation, prices for staples such as bread, milk, eggs, and flour are rising sharply, surging in the past year at double-digit rates, according to the Labor Department. Milk prices, for example, increased 26 percent over the year. Egg prices jumped 40 percent.

Prices keep rising for consumers in January

February 13, 2008
Prices keep rising for consumers in January

WASHINGTON — Consumers paid more to fill up their gas tanks, buy groceries and go to the hospital in January as prices on a wide range of items pushed higher.

Inflation was increasing even as the economy was slowing dramatically, a development certain to raise concerns at the Federal Reserve, which has been cutting interest rates aggressively in the belief that fighting off a threatened recession was more important than worrying about inflation pressures.

Wholesale inflation hike largest in 26 years

January 15, 2008
Wholesale inflation hike largest in 26 years

WASHINGTON (AP) -- Wholesale inflation shot up in 2007 by the largest amount in 26 years even though falling gasoline costs allowed price pressures to moderate in December.

The Labor Department reported that wholesale inflation was up 6.3 percent for all of 2007, reflecting a huge increase for the year in various types of energy costs ranging from gasoline to home heating oil.

Prices for key foods are rising sharply

August 14, 2007
Prices for key foods are rising sharply

MIDLAND, Va. — The Labor Department's most recent inflation data showed that U.S. food prices rose by 4.2 percent for the 12 months ending in July, but a deeper look at the numbers reveals that the price of milk, eggs and other essentials in the American diet are actually rising by double digits.

Already stung by a two-year rise in gasoline prices, American consumers now face sharply higher prices for foods they can't do without. This little-known fact may go a long way to explaining why, despite healthy job statistics, Americans remain glum about the economy.

Food Prices Increasing 7%

June 4, 2007
Food Prices Increasing 7%

Rising gasoline prices have been getting all the attention, but the cost of another, more-important staple is actually rising even more: food.

In the past year, food prices have increased 3.7 percent and are on track to jump by as much as 7 percent by year's end. The current increase is more than double the 1.8 percent jump seen the year before, according to the consumer price index.

Meanwhile, gas prices rose 2.9 percent. Only the cost of health care rose more, and then just slightly.

Gas Exceeds Food, Housing, Health Care and Entertainment

June 4, 2007
Gas Exceeds Food, Housing, Health Care and Entertainment

But for those living paycheck to paycheck, rising gasoline prices can mean the difference between being able to pay bills and going into debt.

On average, U.S. households spent 3.6% of their after-tax income on gasoline in 2005, the period of most recent data. That trails expenses for food, housing, health care and entertainment.

Its Inflation Stupid as Wall Street celebrates

April 20, 2007
Its Inflation Stupid as Wall Street celebrates

Ding Dong the Witch isn't Dead - With this week's release of an apparently benign CPI report, Wall Street resembled Munchkin Land celebrating the death of the Wicked Witch of Inflation. Amidst the revelry few spared much concern that the Index actually registered a monthly gain of .6%. Since such a rise equates to an annualized inflation rate of 7.5%, how could the Wall Street Lollipop Guild be so euphoric? Simple; to pronounce the Witch sincerely dead, one needs only to consistently strip out marginally needed items such as food and energy. Without these "distractions" the core CPI increase can be shown to be only .1%: "way" below the .2% that had been forecast.

In the face of what was in reality a horrific March CPI report, Wall Street once again demonstrated its ability to spin economic straw into gold. The trick to making a 7.5% annualized inflation rate disappear is simply to misdirect attention towards meaningless monthly core numbers instead.

Inflation Numbers Are Worrying

April 19, 2007
Inflation Numbers Are Worrying

To see what was wrong with March's inflation number, you have to understand a little bit about how inflation statistics are calculated by the vast bureaucracy within the BLS — a division of the Department of Labor that is living up to its mandate, apparently, by employing as many economists as possible.

According to that sprawling army of men and women in green eyeshades, March's inflation number was kept low by apparel prices dropping 1%, and hotel prices dropping 2.2%.

But in reality, apparel prices rose by 3%. And hotel prices rose by 2.3%. But that's only in reality. In the bureaucrats' minds, their prices fell.

It's all part of an arcane process called "seasonal adjustment."

The idea is that at certain times of the year the prices of certain goods and services can be regularly expected to fluctuate up or down, for reasons that have nothing to do with inflation. So the BLS 'crats "adjust" those fluctuations away, with the idea of leaving us with a clearer view of inflation forces at work.

Inflation: Fed minutes hint possible interest rate hikes

April 12, 2007
Inflation: Fed minutes hint possible interest rate hikes

Wall Street had been hoping instead that the central bank might lower rates because of the slowing economy. But the minutes released Wednesday showed the Fed was remaining steadfast in its vigilance against inflation. The Fed's Open Market Committee said at its March 20-21 meeting, "all members agreed the statement should indicate that the committee's predominant policy concern remains the risk that inflation will fail to moderate as expected."

Since recent data have suggested slow economic growth and a stable job market, Wall Street's recession jitters have eased and inflation has re-emerged as a big concern.

And with energy costs heading upward, investors' hopes for a rate cut by the middle of the year have dwindled. The government on Wednesday reported a 5.5 million-barrel decline in the nation's gasoline inventories, which was four times what the market expected and the ninth straight weekly drop.

Inflation fears mount

April 12, 2007
Inflation fears mount

Bond market expectations of future inflation have risen to their highest level in seven months, boosting demand for Treasuries that protect investors against increases in consumer prices.

Investors will get a chance to buy $6bn in 10-year inflation-linked Treasury bonds, known as Tips, at an auction on Thursday, and strong demand is expected, particularly as investors originally expected a sale of about $8bn.

"We are nervous about inflation," said David Ader, bond strategist at RBS Greenwich Capital. He said the smaller auction and the seasonal tendency for inflation to rise in March supported demand for Tips.

Food, housing, and healthcare costs rose at a 6 percent yearly rate

March 19, 2007
Inflation is eating US wage gains

Food, housing, and healthcare costs rose at a 6 percent yearly rate in the past three months.

Consumers are being buffeted from several directions. The resurgence of inflation comes even as homeowners face a dip in property values and as the stock market has sagged from a recent peak. All this dragged consumer confidence down a notch in an index released Friday by the University of Michigan.