Wholesale prices spike on steep rise in food, oil

GottaGo · #1 (**permalink**) 03-16-2011, 12:41 PM

So between food (a necessity) and fuel (a necessity, for most, to go earn money to pay for food) inflation was tame. Uh-huh.

You just can't make these things up.

Quote:

WASHINGTON (AP) -- Higher energy costs and the steepest rise in food prices in nearly four decades drove wholesale prices up last month by the most in nearly two years. Excluding those categories, inflation was tame.

The Producer Price Index rose a seasonally adjusted 1.6 percent in February, the Labor Department said Wednesday. That's double the rise from the previous month and the biggest increase since June 2009.

Food prices soared 3.9 percent last month, the biggest gain since November 1974. Harsh winter freezes in Florida, Texas and other southern states sent fresh vegetable prices soaring, representing 70 percent of the increase. Tomatoes, green peppers and lettuce all more than doubled in price.

Meat and dairy costs also rose, reflecting higher prices for corn and soybean that are used in animal feed. Economists expect food prices to keep increasing for the rest of this year. Earlier this month, the UN's Food and Agriculture Organization said world food prices have risen to their highest point since 1990, when the agency first began tracking them.

Gas prices also spiked in February and are even higher now. The national average price was $3.55 a gallon Wednesday, up 42 cents from a month earlier, according to the AAA's Daily Fuel Gauge.

Sharper prices for basic necessities are limiting consumers' ability to spend on more discretionary goods. There was little sign of inflationary pressures outside of food and energy. Core prices have increased 1.8 percent in the past 12 months.

David Resler, an economist at Nomura Securities, said the jump in food and energy prices is likely temporary, echoing remarks made by the Federal Reserve on Tuesday. Vegetable prices should come down as production recovers, he said. And turmoil in the Middle East is a major reason that motorists are facing higher gas prices.

"Both food and gasoline prices are going to stop rising so rapidly," Resler said.

But John Ryding, an economist at RDQ Economics, disagreed, noting that consumers will feel the impact for some time.

"We do not buy the Fed's reassurance that these pressures will be temporary and we believe the public, seeing these strong increases in food and energy ... will not be marking back down their inflation expectations," Ryding said.

In addition to rising prices, the weak housing market could also drag on the economy.

Home construction plunged to a seasonally adjusted 479,000 homes last month, down 22.5 percent from the previous month, the Commerce Department said Wednesday. It was lowest level since April 2009, and the second-lowest on records dating back more than a half-century. The building pace is far below the 1.2 million units a year that economists consider healthy.

The stock market dropped sharply in morning trading on the disappointing U.S. economic reports and growing concerns about Japan's nuclear crisis. The Dow Jones industrial average fell by more than 151 points.

The earthquake in Japan could lower oil prices for the next month or two, which should temper increases in wholesale prices in coming months. Japan is a big oil consumer, and its economy will suffer in the aftermath of the quake.

But as the country begins to rebuild later this year, it will need more oil and raw materials such as steel and cement, which could push up prices further. Japan may also need to import more oil to make up for power lost due to damaged nuclear facilities.

Oil prices rebounded Wednesday after falling sharply earlier in the week. Oil rose $2.20 to $99.38 a barrel in morning trading on the New York Mercantile Exchange.

Wholesale prices rose 1 percent for apparel, the most in 21 years. Costs also increased for cars, jewelry, and consumer plastics.

Wholesale prices spike on steep rise in food, oil - Yahoo! Finance

saltwn · #2 (**permalink**) 03-16-2011, 12:59 PM

Quote:

Originally Posted by GottaGo

So between food (a necessity) and fuel (a necessity, for most, to go earn money to pay for food) inflation was tame. Uh-huh.

You just can't make these things up.

Wholesale prices spike on steep rise in food, oil - Yahoo! Finance

Just speaking from personal standpoint here, the highest inflation I have experienced (Jimmy?, Tricky Dick? Regan?), did not impede my ability to buy whatever I wanted to eat. Just yesterday I almost fainted at a sign that read "Tomatoes $3.98 per lb."

I'm not saying inflation is better. Or worse. Or good or bad for the over all economy. Just that it was easier for me to live under and with much more discretionary spending. Interest rates were higher but so were savings accounts and CDs. It was easier for me to buy an item on credit etc., etc. And I could always pay it off and save that interest.

AZRWinger · #3 (**permalink**) 03-16-2011, 01:02 PM

Gee I dunno, with a record number of Americans on food stamps thanks to eligibility standards so permissive they'd make a sub-prime mortgage lender blush, the rise in food prices will provide fertile ground for the Progressive cure-all more Federal regulation. Naturally government always rewards itself for its failures with more power.

sunwestdog · #4 (**permalink**) 03-16-2011, 01:06 PM

Quote:

Originally Posted by GottaGo

So between food (a necessity) and fuel (a necessity, for most, to go earn money to pay for food) inflation was tame. Uh-huh.

You just can't make these things up.

Wholesale prices spike on steep rise in food, oil - Yahoo! Finance

Some inflation is necessary for a thriving economy.

Is Inflation Really Good for the Economy?

Quote:

While many would suggest that the lower the rate of inflation, the better the market is for consumers, this simply isn't the case. In fact, you may have recently heard members of the federal government suggesting that they will use resources like the central bank to create and maintain certain levels of inflation as necessary for our economy. Former Fed Chair Greenspan even said that a fall in inflation rates would ruin our economy as a whole.

PT Again · #5 (**permalink**) 03-16-2011, 01:07 PM

Quote:

Originally Posted by sunwestdog

Some inflation is necessary for a thriving economy.

Is Inflation Really Good for the Economy?

And a wild apologist suddenly appears.............carrying the water for.........

sunwestdog · #6 (**permalink**) 03-16-2011, 01:11 PM

Quote:

Originally Posted by AZRWinger

Gee I dunno, with a record number of Americans on food stamps thanks to eligibility standards so permissive they'd make a sub-prime mortgage lender blush, the rise in food prices will provide fertile ground for the Progressive cure-all more Federal regulation. Naturally government always rewards itself for its failures with more power.

That's just silly. More info on why we need inflation.

Why Does Ben Bernanke Think Inflation Is Good for the Economy? - The Curious Capitalist - TIME.com

Quote:

First of all, inflation is not something that is an unwanted byproduct of the Fed's plans to boost the economy. Bernanke is actively trying to boost inflation. People were freaking out a few months ago when they realized this, and thought Bernanke had really lost his senses. Instead, I predicted that he was doing exactly the right thing and that rising inflation would be a good thing for the economy and not something that was bound to lower our standard of living so much we could no long afford indoor plumbing. Here's a bit from a post a few months ago where I backed the Bernanke and, again, predicted inflation would be good for us:

sunwestdog · #7 (**permalink**) 03-16-2011, 01:12 PM

Quote:

Originally Posted by PT Again

And a wild apologist suddenly appears.............carrying the water for.........

Do the research and then you can call me whatever you want.

PT Again · #8 (**permalink**) 03-16-2011, 01:22 PM

Quote:

Originally Posted by sunwestdog

Do the research and then you can call me whatever you want.

INflation is NEVER a good thing when its only affecting the Necessities. IF people are spending their disposable income on the inflated costs of the basic items they need to survive, the economy will not be better for it.

GottaGo · #9 (**permalink**) 03-16-2011, 01:26 PM

Quote:

Originally Posted by sunwestdog

Some inflation is necessary for a thriving economy.

Is Inflation Really Good for the Economy?

SOME inflation.

But when you add it to a financially strapped country (recovery ain't here yet) people are getting hurt.

I don't like Bernake, I don't trust him to balance his checkbook.

Glad I have my veggie garden, for my family and those aound us. Between the poor quality and the prices of veggies in stores, we'll be needing it.

sunwestdog · #10 (**permalink**) 03-16-2011, 01:27 PM

Quote:

Originally Posted by PT Again

INflation is NEVER a good thing when its only affecting the Necessities. IF people are spending their disposable income on the inflated costs of the basic items they need to survive, the economy will not be better for it.

When inflation hits, it always hits necessities. All the research I did says moderate inflation is critical for economic growth. If you have research that says differently, I would be glad to read it. Right now all I see is your opinion.

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