Inflation

[qldfrog]

Yup, and they're always looking in the rearview mirror.

I say this somewhat flippantly, but I use my dear old Mum and Dad as a "leading indicator of inflation". They're retired and on fixed income so very sensitive to price increases in everyday items. My dad has always been a grumpy old man and so complains about everything, but my mum is far more considered. For the past two months she's been complaining about the significant increase in her everyday shopping: the recent increases in bread from bakers delight, the exorbitant price of Brussel sprouts in Coles and that petrol is not far off $2 a litre. Their cost of everyday necessities has increased dramatically over the past few months and looks set to continue to increase. If that ain't inflation not sure what is.

same here, once a salary stop falling there is a much more acute look at your day to day cost: the life pace is more level so your purchase more level too: you eat at home veryday so no business travel etc..as a result you can easily and relatively accurately look at your expenses and the shopping trip cost..and yes it is going up: in season tomatoes at 4 to 8$ a kg? I was thinking a month ago; meat is cheaper!!!!!
Well meat going up too based on last trip to woolies..
we do not buy either as pretty self sufficient but outch..bread at $7 a nicer loaf..seriously? etc etc
then petrol costs, etc
noone in his right mind could deny serious inflation taking place.
Lastly AUD has fallen 5% vs USD in the last month..expect some serious related cost soon for imports

 

[MovingAverage]

we do not buy either as pretty self sufficient but outch..bread at $7 a nicer loaf..seriously? etc etc

Every time I talk to my Mum she bangs on about who the hell in their right mind spends $7 on a loaf of bread...literally, she goes on about it for at least 15 mins every time I talk to her I don't have the courage to explain to her that my wife is one of those

 

[Sean K]

Could the US and the West possibly go Weimer Republic in the next few years? Just as China starts taking over.

We've kicked the can down the road long enough.

 

[mullokintyre]

And right on cue, inflation hit came in at 6.9%, the highest since 1982.
For those ASF members old enough to rememebr, 1982 was the year in which Australian housing rates started an inexorable climb to hit 18% in 86 or 87.
Doubt very much it will get that high unless the weimar republic comment above does play out.
From Zero Hedge

Consumer Inflation stayed red hot in November as core CPI rose a robust 0.53% mom, which boosted the yoy rate to 4.93% from 4.56% yoy—the highest since 1991. Headline CPI jumped 0.78% mom as energy prices spiked 3.5% mom and food rose 0.7% mom. Headline % yoy similarly soared to 6.81% yoy from 6.22%—the highest since 1982.
Outside of autos, core goods components broadly gained as apparel popped 1.3%, household furnishings/supplies rose 0.7% mom, and both recreation and other goods rose 0.3% mom. One exception was education/communication commodities which slipped 1% mom. The breadth of gains in goods likely reflects ongoing constraints in the supply chain as well as the pull forward in the holiday shopping season, which meant earlier discounting in October.

That "transitory" inflation has been going on now for 5 quarters since the 2020 covid contraction, and the rate of increase is accelerating.
However, all is not lost.
if those darn inflationary figures don't come down, all you have to do is redefine the base rates you compare to, and hey presto, inflation comes down, which is exactly wat has happened in the past, and has been foreshadowed by the BLS.
Once again from Zero hedge

as any economic history buff knows the US dramatically changed how it calculates consumer inflation back in the 1980s, an event extensively covered by AllianceBernstein former chief economist Joseph Carson on this website in the past (see "Consumer Price Inflation: Facts vs. Fiction") with the most important difference being that while the CPI of the 1970s included house price inflation, the current measure does not. Instead, home price pressures have been swept in the purposefully nebulous Owner-Equivalent Rent which can be whatever politicians wants it to be (there have been other definitional changes, see here, here, here and here for more). Bottom line, however, is that if today's CPI did include house prices in its measurement, the currently reported inflation numbers for house price inflation would push CPI (and core CPI) to double-digit gains.
as the BLS has reported, starting next month it will adjust the weights for its Consumer Price Index basket, which will be calculated "based on consumer expenditure data from 2019-2020." Alas, there is no further detail on this critical topic, although we will take any bet that post-revision reported inflation will drop because, well, "adjustments."

It matters little to the well heeled as to what the headline or real inflation levels are, they just carry on the stress free lives as usual.
But for those people who have to live at the middle to bottom level, it is of vital importance.
It matters little to them whether rents or volatile gas prices are included in CPI figures, they still have to find the money to pay the bills.
Mick

 

[Sean K]

And right on cue, inflation hit came in at 6.9%, the highest since 1982.

"Inflation beast is out" and gold price looks to $3K in response to Fed's policy, says mining strategist​

Kitco News Friday December 10, 2021 16:47

The inflation beast is 'out of its cage,' and the Federal Reserve is now forced to respond. But a tighter monetary policy does not mean lower gold prices, says Christopher Ecclestone, Principal and Mining Strategist at Hallgarten & Co. And here's why.

"There's only one reason why the price of gold will go down, and that is if central banks soft-pedal on inflation, and that's what they have done so far," Ecclestone explained. "But as we see inflation continue to rise, particularly in the U.S. and the U.K., it has gotten out of control. Only higher interest rates will keep inflation down."

Ecclestone spoke to Michelle Makori, Lead Anchor and Editor-in-Chief of Kitco News, on the sidelines of the Mines and Money London conference. Hallgarten produces research on the natural resources sector.

In terms of inflation and its economic impact, Ecclestone stated that investors who have confidence that the Fed will be able to control inflation are mistaken.

"The inflation beast has gotten out, and it's going to take a lot of effort to get it back into its cage," Ecclestone emphasized. "This will ultimately impact property markets. It's going to impact companies that are highly leveraged. We are already seeing big property crashes in China that are linked to overextended property developers."

 

[divs4ever]

sounds scary until you realize the CPI ( in the US and Australia for two ) has been manipulated and 'modified ' for the last 40 years , and the true figure would probably mortify you

but heck if you didn't see it coming years back , you aren't researching for yourself ( i have been trying to invest to offset this trend since i started investing in 2011 , which is why i wasn't sitting on big piles of cash , when my instincts have been telling me 'to cash in and run , since September 2019 )

the ultimate question is does this end in a hyper-inflationary collapse , or we get a distraction via a major war , or something else ( nasty )

DYOR

good luck

 

[mullokintyre]

sounds scary until you realize the CPI ( in the US and Australia for two ) has been manipulated and 'modified ' for the last 40 years , and the true figure would probably mortify you

but heck if you didn't see it coming years back , you aren't researching for yourself ( i have been trying to invest to offset this trend since i started investing in 2011 , which is why i wasn't sitting on big piles of cash , when my instincts have been telling me 'to cash in and run , since September 2019 )

the ultimate question is does this end in a hyper-inflationary collapse , or we get a distraction via a major war , or something else ( nasty )

DYOR

good luck

I am going for a major war.
There are so many flash points - China VS Taiwan, US Vs Iran, Russia Vs Ukraine, South vs North Korea, Solomons vs themselves, and so forth.
athere is so much money to be made from wars, its hard for some to resist.
Especially if it can be fought by proxy.
That way your own dispensable foot soldiers don't get dispensed.
Mick

 

[DannyB0000]

Were not to get a major war because there are nuclear weapons involved. Thousands of nukes a piece between the Americans and the Russians combined, a few hundred nukes with the China. If there really is a major war between these sides you won’t have to worry about rising inflation or the Stockmarket crashing anymore.

 

[divs4ever]

the only war i will support is one where politicians and senior public servants and generals are in the very front line ( even closer to the action then Napoleon in his major attacks )

and war is just a distraction for defaulting on the existing debt , anyway

 

[Smurf1976]

Any war doesn’t necessarily need to involve nukes or even soldiers with guns.

It could well be fought by a team sitting in an air-conditioned office armed with nothing more than ordinary desktop computers and the required knowledge.

 

[divs4ever]

of course the war could already be in progress , sanctions , diplomatic isolation , a bit of strategic disclosure/omission on health issues with maybe some supply-line glitches thrown into the mix

 

[qldfrog]

of course the war could already be in progress , sanctions , diplomatic isolation , a bit of strategic disclosure/omission on health issues with maybe some supply-line glitches thrown into the mix

no not at all we are just mankind in a fight against a pangolin, oops , bat oops , whatever virus of unknown origin (anything as long as it is not China), all united ..
next stage food crisis..and people tend to react to that last one

 

[againsthegrain]

no not at all we are just mankind in a fight against a pangolin, oops , bat oops , whatever virus of unknown origin (anything as long as it is not China), all united ..
next stage food crisis..and people tend to react to that last one

Back in 1930s Stalin staged a food crisis in Ukraine, estimates range between 1m to 7m that died of starvation. Been done before, can be easily orchestrated if needed

 

[Sean K]

Off topic from inflation but in regard to the above comments, we're already in an undeclared war. Much like the World was prior to every major kinetic conflict. At the moment, it's being played out in cyber space and in grey areas, but it's been going on for several years. Probably since China started taking reefs in the Spratlys and militarising them, stealing US IP, hacking our systems, and testing Taiwan's air defences. Unfortunately, it's just normal great power ascension but with a difference. Nuclear weapons mean that the homelands of the major powers will probably not be attacked. Yes, MAD is still a thing. So, most likely a limited war in the South/East China Sea between China and US and their allies will happen and lines drawn at some point. But attacking the mainland of either country will invoke a nuclear response which is difficult to imagine unless there's a mad man holding the codes.

 

[mullokintyre]

In a bitter blow to the inflationary discussion, it would seem that prices for the items in the 12 days of christmas song have gone up by a mere 3% in two years. Apart from the Swans, every other bird in the index has increased significantly.
All of the gifts that included humans in some form or another were at or around the 3% mark.
The 5 golden rings were no help at al.
Mick


Courtesy of Todays Australian

 

[JohnDe]

Inflation is not playing ball.

Covid has caused a massive disruption with the transport of goods, cargo ships have been stuck out at sea and unable to unload, this has caused some shortages of goods and prices to rise. But those ships are starting to unload, and during the shortage there was some panic that caused larger orders which will flow through in the next cycle.

Have a listen to Cathie Wood from the 19:14 minute mark -

 

[eskys]

Inflation on the home front because of Covid...sick leave, logistics problems, COL, WOW affected because of this. ING down more than 7% today because of Covid...one sector linked into another

Inghams $ING: "...the rapid spread of the Omicron variant...and the resulting staff shortages, are now also having a significant impact on the Australian supply chain, operations, logistics & sales performance of Ingham's".

 

[moXJO]

Inflation on the home front because of Covid...sick leave, logistics problems, COL, WOW affected because of this. ING down more than 7% today because of Covid...one sector linked into another

Inghams $ING: "...the rapid spread of the Omicron variant...and the resulting staff shortages, are now also having a significant impact on the Australian supply chain, operations, logistics & sales performance of Ingham's".

Temporary.
This wave is likely to fall hard after the peak.
Nsw is already near peak and predictions on Vic is that the peak will come by the end of the month.

After that it's a different world (till next variant).

 

[eskys]

Temporary.
This wave is likely to fall hard after the peak.
Nsw is already near peak and predictions on Vic is that the peak will come by the end of the month.

After that it's a different world (till next variant).

I'm so glad you came in and pointed this out. Woke up this morning after mulling over this and thought there's a flaw in my post yesterday. Was thinking if anyone will come in and correct this mistake of mine.....the word 'inflation' the first word in the post should have been 'price hikes' As you pointed out, this price hike is only temporary. Price hikes do not equal inflation. It's about demand and supply.....this is what this forum is about.....ask and put our alternative thoughts across and we will get our brains ticking..........thank you for posting, good luck with your investments, moXJO

 

[divs4ever]

might not be so temporary , businesses usually try to claw back cost increases over time , and if so, of those increased costs are wages raised to reduce staff shortages .. well it is hard to reduce staff wages at a later date ( and retain staff )

other likely cost increases include energy , sure oil,gas , petrol might come back you still have electricity costs

also there will probably be an increase in the cost of borrowing money , currently it is very low ( in some places ) you would expect at least a return to historic averages

there is also a chance of increased regulation, and compliance costs ( these sort of folks just can't help themselves )