Accentuate The Positive

US Economy and Globalization Part 8 of 17

Yet, there appears to be some uncertainty about whether we will continue to see inflation slowing. Partly this stems from retailers who report cost increases on goods imported from China or from shippers who see continuous upward pressure on lease rates to move more expensive imports Winning Forex Trading across the seas. We are also hearing it in other anecdotal reports, such as the rise, nationwide, of salaries paid to attorneys, architects and other highly skilled professionals.

Our concern about inflation at the Dallas Fed stems from two more pervasive sourcesfood and energy, where we foresee a risk of a more pernicious pass-through effect than we saw in the recent price increases of underlying commodities.

In food markets, we have seen a dramatic divergence this past year between food prices and the core measures that indicate inflation in the 2 percent range. The CPI shows food up 5 percent through September. Green grocery prices are Day Trading for Income rising at a double-digit pace. The Producer Price Index for finished consumer foods, or wholesale food prices, is up 4.3 percent year to date. This pattern has historical precedent. A spread of the current magnitude between food price inflation and the core index occurred on several occasions between 1957 and 1980. But we have not seen it in a quarter century.

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