Wednesday, November 14, 2007


You are going to hear headlines of benign inflation being reported. Don't believe it:

"From October 2006 to October 2007, finished goods prices advanced 6.1 percent. Over the same period, the index for finished energy goods climbed 16.6 percent, prices for finished consumer foods rose 7.1 percent, and the index for finished goods other than foods and energy increased 2.5 percent. At the earlier stages of processing, prices received by intermediate goods producers advanced 5.6 percent, while the crude goods index jumped 25.7 percent for the 12 months ended in October."
What's the old saying? There are liars, damned liars and statisticians?

The above description is the annual rate of inflation for each area noted. Put simply, you add this months inflation and removed October 2006. Seems pretty straightforward to me. But then, I don't work for the Fed.

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