This Week (more or less) In Inflation

March 10:  New York Federal Reserve Chairman William Dudley states “Today you can buy an iPad 2 that costs the same as an iPad 1 that is twice as powerful.  You have to look at the prices of all things.”  Unfortunately, he was not praising the new technology used in the iPad 2, but rather was offering an explanation as to why inflation is not as bad as it seems.  The aghast audience, likely unable to afford either iPad version and struggling with the cost of more basic needs, left with thoughts of Marie-Antoinette raging in their heads.

March 16:  Wholesale prices jumped last month by the most in nearly two years due to higher energy costs and the steepest rise in food prices in 36 years. Food prices soared 3.9 percent last month, the biggest gain since November 1974. Most of that increase was due to a sharp rise in vegetable costs, which increased nearly 50 percent. That was the most in almost a year. Meat and dairy products also rose.  Energy prices rose 3.3 percent last month, led by a 3.7 percent increase in gasoline costs.

March 20:  A man, unhappy with the rise in price from 99 cents to $1.49 for a Taco Bell burrito, opened fire on the restaurant manager with an air gun.  Also carrying a semiautomatic assault rifle and pistol, the man exchanged gunfire with police and drove off.  Tear gas was later used to end a stand off at a nearby motel. 

March 21:  US existing home sales numbers for February show a 9.6 percent decline from the previous month and a 4 percent drop in prices from last year.  Unless you're buying real estate, falling home prices have little effect on your spending.  Phil notes that "housing is 42% of the CPI and declining housing costs have masked rising inflation for 5 years now".  This, and the exclusion of food and energy from core CPI, explains why there's less money at the end of the month despite the reported low CPI numbers.

March 21:  The premium of a share of the Sprott Physical Silver Trust (PSLV) is 21%.  The demand for physical silver is extraordinarily high.  Meanwhile the dollar is in long-term reverse gear as shown in this chart from Jesse: