In February, import prices rose 0.2% in line with the Econoday consensus. Export prices rose 0.3%, slightly more than the consensus estimate of 0.2%.
Revisions took upped January import prices from 0.4% to 0.6% and export prices from 0.1% to 0.2%.
Year-over-year import prices jumped from 3.7% to 4.6% and export prices from 2.3% to 3.1%.
Econoday cites price pressures: “An important sign of pressure comes from the overall year-on-year rate which is at 4.6 percent, its highest level in 5 years, since February 2012.”
That’s a bunch of speculative oil-related nonsense.
As discussed previously, if energy prices continue to rise, there will be price pressures. And if not, there likely won’t.
Monthly Crude Chart
Crude Weekly Chart
Those two charts explain year-over-year price pressures and upcoming month-over-month price changes.
Year-over-year inflation will look reasonably strong for some time unless there is a price collapse. The same cannot be said for month-over-month prices.
Inflation Scare or the Real Deal?
I don’t know precisely what crude will do, nor does anyone else. But with rate hikes coming, and GDP estimates diving, I highly doubt oil is about to skyrocket.
Until proven otherwise, I believe, and the charts suggest, that we are in the midst of a price inflation scare.
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With the Fed hiking and GDP estimates plunging, oil does not seem poised for a lift-off.
Mike “Mish” Shedlock
It can be hard to tell with crude pricing, but we have the price agreement between the OPEC countries… Is one of those OPEC members cheating? Oh, that never happens.
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Oil price down almost 9% in TWO DAYS on no news at all.
Casino Capitalism, in action.
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If oil stays flat here m-o-m prices likely to decline.
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The Casino version is the only one left. Most actual users now need to lock in, or at least bound, prices via hedging contracts. Leaving immediate prices up to those providing hedges. Or trying to game those that do. Or game those again. Nothing to do with underlying supply/demand conditions at all. It’s another destructive-to-the-real-economy effect of financialization on the back of mountains of fresh print.
Just like insurance, hedging contracts were a Godsend for farmers and buyers of farm products, and perhaps others, since individual volatility could be really crushing. But for fairly stable commodities like oil, and by now everything else also due to the sheer size of the financialization rackets, the volatility is now mostly due to the rackets themselves. Not actual underlying factors.
While simultaneously, again due to the rackets, everyone have been forced to lever up so much that even a tiny, entirely manageable in an unmanipulated market, price movement, can become make or break. So everyone now “needs” the hedging “products” pimped by the racketeers.
Hence, we have a world where everything is priced according to the speculative fervor of a bunch of generally clueless, but well connected and funded, hacks. Whom everyone else need to sponsor by buying “insurance,” from. By now, almost entirely against volatility that is itself largely created by the rackets themselves. And because the rackets, have de facto mandated leverage levels that make even tiny unhedged price movements, unnaturally hard to swallow.
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youngsters gonna get their first taste of some real hyperinflation for first time in 40 years,and with soaring inflation,stagflation, shrinkflation,chinese crapification,lead to soaring private/public sector dept.look for congress to give trump another massive 5trillion credit limit increase on the tax payer platinum credit card
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“Inflation Scare or the Real Deal?”
…
My money where my typing is … the bond market … the LONG end … ALL IN
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Not a bad call. Had a nasty market correction in 2000 and another in 2008. It’s 2017 and it seems we are about due. We have both the stock market and housing out of site this time.
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While I don’t disagree with your sound judgement, I do wish Americans would just grow up enough to flat out overnight bankrupt you by raising the middle finger God gave them for just such contingencies, and start chanting “We’re not gonna pay it!” in decisive numbers. Then dump the failed experiment with unbacked fiat, and get behind a real, unmanipulated currency again. So that a once productive population can get back to doing something productive again. Instead of, like a bunch of halftard drones built for the fun and profit of their overlords, waste their lives dorking around concerning themselves with a bunch of manipulated so called “markets.”
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Given that oil prices are dollar based and if we are having a price inflation scare here in the US, wouldn’t the rest of the be in panic now? USD is 5% stronger than a year ago. But this is apparently not the case, so is the world in a severe price deflation with oil?
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