Import Prices Now Breach 20% Year over Year

Well once we get through the latest financial crisis (remember when they told us it was the kitchen sink quarter last fall?) - we can begin to focus on the disaster that is the economy, errr.... I mean, we can focus on the "slightly slow growth" economy with benign inflation that has not become anchored in the citizanery psyche.

Unlike the talking heads, I do not focus on the highly manipulated CPI or PPI - if you've been around a while you know why. I love to use the import report which came out today [Jun 12: Import Prices Continue to Breach New Records] - and boy is this one a doozy. Click on that link in the previous sentence for some background.

We've been tracking this report since the blog began, since frankly we import most of our goods into America - so by tracking those prices we can see what inflation "really is". Now keep in mind, crude oil is part of the figure but let's look at the trend we have been tracking

November 07, the year over year import price increase was 11.4% [Dec 12: Real Inflation Showing in Reports not Called PPI/CPI]
January 08, the year over year import price increase was 13.7% [Feb 15: Today's Import Report Continues to Support my Stagflation Thesis]
March 08, the year over year import price increase was 15% [Apr 11: GE Warning and Import Prices Show us Real Inflation]
April 08, the year over year import price increase was 15.4% [May 13: Import Prices Continue to be a Disaster]
May 08, the year over year import price increase was 17.8% [Jun 12: Import Prices Continue to Breach New Records]

Drumroll - June 2008 -----> 20.5%!

Boo Yah! But no inflation in America. Only the rest of the globe... or so we are told insistently each month.

• Prices of goods imported into the U.S. rose more than forecast in June as record energy costs and a decline in the dollar made purchases of foreign products more expensive.
• The 2.6 percent increase in the import price index last month matched the gain in May, the Labor Department said today in Washington. The index jumped 20.5 percent from a year ago, the biggest year-over-year increase on record. Prices excluding petroleum rose 0.9 percent last month.
• Food prices rose 1.9 percent in June and were up 15.8 percent from a year earlier, the biggest year-over-year jump since this measure began in 1977.
• The year-over-year increase for June in the main index was the biggest since it was first published in 1982
• Prices for imported industrial supplies and materials increased 5.8% last month, and were up 50.1% year over year.
• Excluding all fuels, import expenses rose 6.6 percent in June versus a year earlier. (whew! thank god no one uses fuel! So the "non fuel, non food" only went up 6.6% - that works wonders when workers wages are going up by half as much!)

On to the other key measure we love to track, and we were very early on - the change from China as a deflationary pressure to an inflationary pressure ; if you are interested in this developing situation I have a history of stories on the subject here. Very few are talking about this in the mainstream - we used to see price decreases from China, now just the opposite.

• Prices of goods from China were up 0.6 percent, those from Latin America rose 2.9 percent and imports from the European Union cost 0.6 percent more in June. (this ties last month's record)
• Prices for goods from China rose to a 4.8% annual gain.(this is a new record)
  

Folks, we are way overdue for a rally - we needed an "event" - and this "foregone conclusion" of the nationalization of our mortgage market strikes a chord as a potentially good one for this cycle. (quite interesting to see no real panic today - so apparently it's all priced in by now??) Nothing straight down. Or up. But please don't forget the reality of what is happening in the "real economy" as the market slithers upward (one of these days) and you are assured everything will be ok "by the 1st half of 2009" (told to you by the same people who said in 2007 there were no major issues, and then when issues starting spreading told you everything will be fine by first half 2008, and then second half 2008, and so on and so forth) Their Kool Aid is dangerous. Inflation is becoming a disaster, and our Federal Reserve (non political of course) sits on its hands to bail out banks with low rates, continuing to throw middle class and lower class to the wolves; in sharp contrast to the other major "1st world" countries across the globe. Enjoy.

Or I could just be pulling a fast one on you and as Phil Gramm says, people such as I are the root cause of a nation of whiners. I assume he relies on government reports. Lies. Lies. And more Damn Lies.