Friday, July 15, 2011

Leading & Lagging U.S. Inflation Indicators Rising

While money supply in much of Europe is stagnating, it is rising fast in the United States. Up 1.9% in a month (25% at an annualized rate), up 3.6% in the latest 3 months (15% at an annualized rate), up 5.2% in the latest 6 months (10.5% at an annualized rate) and up 8.6% in the latest year.

Increased demand for dollars because of the European debt crisis will limit the price inflationary impact, but it will likely not eliminate it entirely.

Meanwhile, though the drop a month earlier in oil prices caused a drop in the monthly CPI, the lagging indicator of inflation known as "core" CPI rose 0.3% for the secon month in a row. With oil prices now recovering and money supply increasing, all-items price inflation will likely soon return at an elevated level.


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