The majority of the inflation from 2012 occurred in the first quarter with extremely high monthly rates of inflation. Overall in 2012 there were 6 very inflationary months (on a monthly basis), 5 slightly deflationary months and 1 very deflationary month (November). The first month of 2013 started out pretty inflationary but the first quarter of the year generally shows the most inflation for the entire year.
See Table below
| Month | Monthly Inflation |
Annual Inflation |
| Jan-12 | 0.44% | 2.93% |
| Feb-12 | 0.44% | 2.87% |
| Mar-12 | 0.76% | 2.65% |
| Apr-12 | 0.30% | 2.30% |
| May-12 | -0.12% | 1.70% |
| Jun-12 | -0.15% | 1.66% |
| Jul-12 | -0.16% | 1.41% |
| Aug-12 | 0.56% | 1.69% |
| Sep-12 | 0.45% | 1.99% |
| Oct-12 | -0.04% | 2.16% |
| Nov-12 | -0.47% | 1.76% |
| Dec-12 | -0.27% | 1.74% |
| Jan-13 | 0.30% | 1.59% |
Looking back at 2012 we can see deflationary forces building. Our friends at Elliottwave believe that more deflation is on the way and that its strength will build. The FED is cranking up QE3 in an effort to prevent it. So it will be interesting to see if the FED or the market is stronger and if in the long run you can solve the debt problem with more debt.
Key Economic Index Turns South
By Elliott Wave International
The federal government defines the Producer Price Index (PPI) as “the average change over time in the selling prices received by domestic producers for their output.”
[editor’s note: Producer Prices are the costs producers have to pay for the components they use to build things. If they go up companies have to charge more just to break even.]
With help from the Federal Reserve’s massive inflationary policies, the PPI has climbed even as the economy began to fall in 2008-09.
All the while, the financial media persisted with stories of an economic recovery. EWI analysts offer an independent perspective.
The New York Times declares, “Economic Gloom Starting to Lift.”
Corporate America, however, is not so sure. This chart of producer prices [wave labels removed] probably illustrates why. After years of largely uninterrupted growth, the Producer Price Index appears to be on the cusp of a critical reversal that should turn into a steady decline in wholesale prices.
Our friends at Elliott Wave International thought this message was important enough to repeat. So you can read the full text of the originally published December Article here. Or you can read a more recent post The Secret Word: Deflation – And the Next Five Years of Financial Turmoil~Tim McMahon, editor
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