- Energy up 17.4%
- Transportation up 8.1%
- Food up 5.1%
- The PDF version of the news release
Bob Brinker said:
- "We have always maintained that rising oil prices act as a tax on consumers, and are therefore counter-inflationary as they have a negative impact on consumer discretionary spending power."
[From March Inflation Up on Higher Energy and Food Costs]
- ==>"The CPI is up 4.2% in the past year and has risen at a 4.9% annual pace over the past three months. "
Economic growth has nearly vanished as we crawl along with less than 1.0% GDP growth while our inflation has doubled over the very low rate of inflation we had just a few years ago when economic growth was 3 to 5% and oil was less than half what it is today.
This final chart from my friends at Martin Capital show CPI inflation is not low as Brinker claims. Furthermore, it shows producer price inflation is even worse which puts a strain on profits and explains part of the downward revisions in S&P500 earnings estimates since companies are reluctant to raise prices now to pass on inflation to their customers. If the economy improves, then this "inflation debt" will eventually get passed to customers through higher prices since companies are in business to make money.
The chart of yearly change in CPI inflation (dark green curve on the chart) shows inflation is near a 10-year high. The price of oil has more than doubled in the past year which has caused inflation to roughly double from low 2% to a 4.9% annual pace over the last three months!
The good news is the Federal Reserve and ECRI both expect inflation to moderate since very few expect the price of oil to double again in the next year from the current level of $135/barrel. My "Inflation Expectation" chart of the 10-year US Treasury rate minus the 10-year TIPs rate show bond investors expect long term inflation to run about 2.53%.