Later today, the FED will ignore the recent CPI and PPI data; the text of today’s release from the FED was already written before the CPI data was released. I’m kidding; I actually have no idea. What I do know is that today’s CPI data solidifies Bernanke changing the language at the next meeting.
Ben has proven that he has zero ability to forecast inflation accurately, so when you see him PANDER today, it will be based on what he thought the CPI and PPI were going to be prior to this week. There is a one month lag in the data – and he is a month behind that data.
The cost of living (CPI) in the US accelerated in November from October - my 1.9% estimate turned out to be 1.8%. Regardless, it still marks the end of DEFLATION in the US. The core was not up as much as expected due to a drop in ”shelter” costs. It’s my belief that the CPI continues to run counter to what REAL people and business are experiencing.
The Research Edge Inflation index is still signaling that the FED will need to raise rates sooner rather than later.
Howard W. Penney