Abenomics: From Faith to Failure Why the biggest monetary stimulus effort in the world did NOT stop deflation in its tracks By Elliott Wave International When Shinzo Abe became the Prime Minister of Japan in December 2012, he was regarded with the kind of reverence that politicians dream about. He was featured in a hit pop song ("Abeno Mix"), hailed as a "samurai warrior," and featured on the May 2013 The Economist cover as none other than Superman. But in the two short years since, Abe as Superman has been struck down by the superpower-zapping force of economic kryptonite. On November 17, government reports confirmed that Japan's brief respite from a 20-year long entrenched … [Read more...]
Deflation: The Last Argument of Central Banks
In today's article John Mauldin looks at "good" deflation vs. "bad" deflation, Austrian vs Monetarist vs Keynesian economics, causes of falling agricultural and manufactured goods prices, ShadowStats, hedonics, Asset Inflation Versus Price Inflation and more. ~Tim McMahon, editor Thoughts from the Frontline: The Last Argument of Central Banks By John Mauldin For a central banker, deflation is one of the Four Horsemen of the Apocalypse: Death, Famine, Disease, and Deflation. (We will address later in this letter why War, in the form of a currency war, is not in a central banker’s Apocalypse mix.) It is helpful to understand that, before a person is allowed to join the staff or board of a … [Read more...]
Inflation or Deflation? – Yes
Over the years we've published a variety of articles on the inherent "tug-of-war" between inflationary and deflationary forces in the world including How can we have Inflation and Deflation at the same time? and Battle of the 'Flations both from back in 2008 and Deflation or Inflation - Which is it? in 2009 and Which is Stronger- Inflation or Deflation? in 2010. Another recurring theme has been Velocity of Money and Money Multiplier- Why Deflation is Possible and today John Mauldin will take a stab at each these critical topics once again. Understanding their interrelationships will greatly help you understand the monetary forces at work.~ Tim McMahon, editor The Flat Debt Society By … [Read more...]
Europe is Teetering on the Edge of “Japan-Style” Deflation
Europe: The ONE Economic Comparison That Must Not Be Named... Was Just Named The Continent is now teetering on the edge of a "Japan-style" deflation. Here's our take on it. By Elliott Wave International It's happened. The one economic comparison Europe has dreaded more than any other; the name that's akin to Lord Voldemort for investors has been uttered: "deflation." And it's not just "deflation." You can still spin that term in a positive light if you get creative enough. Say, for example, "Falling prices during deflation actually encourage consumers to spend." But once you add the following two very distinct words, there's no way to turn that frown upside down. And those words … [Read more...]
Inflation Falls 3rd Straight Month
The Bureau of Labor Statistics (BLS) released the August inflation numbers today and for the third straight month inflation is lower. The annual inflation rate for the 12 months ending in May was 2.13%. The June inflation numbers were 2.07%. In July inflation fell to 1.99% and in August it was down to 1.70%. As the inflation rate falls this is "disinflation" on an annual basis although July and August were "deflationary" on a monthly basis, i.e. each monthly number was below zero at -0.04% and -0.17% respectively. Our Moore Inflation Predictor (MIP) is generally quite accurate. Last month the MIP forecast a slight decrease in inflation for August but we actually got a bit larger 14.5% … [Read more...]
BLS Releases July Inflation Numbers
The U.S. Bureau of Labor Statistics released their inflation numbers for July on August 19th. The basic summary they emailed read as follows: CPI for all items rises 0.1% in July as food prices rise but energy prices decline 08/19/2014 On a seasonally adjusted basis, the Consumer Price Index for All Urban Consumers increased 0.1 percent in July after rising 0.3 percent in June. The index for all items less food and energy rose 0.1 percent in July, the same increase as in June. If you just read that what impression would you get? Maybe that inflation is UP? At least that is what the headline implies. But then it says, energy prices are down. And it also implies … [Read more...]
Inflation Flat in June 2014
The Bureau of Labor Statistics released their Consumer Price Index (CPI) for June of 2014 on July 22nd. Based on the rounded numbers this would result in an Annual Inflation Rate of 2.1% the same as last month (May). But here at Inflation Data we look at it to two decimal places and based on that we can see that in May the rate was actually 2.13% and in June it fell ever-so-slightly to 2.07%. Many will say that it isn't statistically significant and it quite possibly isn't but it is quite possible that inflation is heading down again. Time will tell. I find it interesting that both the WSJ and Reuters top articles on inflation today say inflation is "Up" WSJ:Spike in Gas Costs Pushes Up … [Read more...]
Japanese Inflation Higher than U.S- First Time Since 1978
Core inflation in Japan was 3.4% in May while U.S. inflation was officially, only 2.13%. This was the fastest rise in Japanese prices since April 1982. In the 1970's inflation was bad in the U.S., but it was much worse in Japan. Every rise in U.S. inflation was multiplied in Japan, for instance, the average annual U.S. inflation rate, in 1974, was 11.04% while in Japan it was more than twice as high at 23.10%. But in 1978 a strange thing happened, Japan got its inflation under control and Japanese inflation dropped down to 4.2% while U.S. inflation remained at 7.59%. And by1979, Japanese inflation had fallen to 3.8% while U.S. inflation climbed to 11.35%. In 1980, although Japan had a … [Read more...]
US Consumer Prices Rose 0.4% in May to 2.13%
The U.S. Bureau of Labor Statistics released the Consumer Price Index (CPI) for the month of May today, at 237.900 it was up sharply from April's 237.072. This resulted in monthly inflation increasing 0.35% from April to May. Thus the annual inflation rate jumped from 1.95% in April to 2.13% in May. Key gainers on a monthly basis were fruits and vegetables which gained 1.4% over the month and account for 1.352% of the total CPI index . Airfares were up a whopping 7.4% as the summer season got under way which accounts for 0.77% of the total CPI. The other major gainer was electricity which increased 4.1% and accounts for 2.832% of the index. Meats, poultry, fish, and eggs were also up … [Read more...]
Various Methods of Calculating Inflation
Why are There So Many Different Ways to Calculate Inflation? We've all heard the old saying, "Figures don't lie but liars figure" or perhaps "You can make numbers say anything you want". Both of these sayings contain the underlying assumption (or at least possibility) of malicious intent. But even if you have the raw data and just want to get at the truth, number calculations can present difficulties because the answer you get can depend on how you analyze it. For instance, you would think that if you want to know the "average" income of a group of 10 people it would be easy to calculate. And if all the incomes are relatively closely grouped it is easy... simply add them all up and … [Read more...]
