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“Inflation is low now, but could be excessive in the future”

And that is the headline from a post on cnbc.com.  The comment is attributed to Federal Reserve Governor Bullard, and the story is so developing that as of this writing, there’s no actual story attached with the caveat that it’s “developing”.

Gee, y’think, DiNozzo?

That a comment like that would come from a Federal Reserve Governor is stunning, a recognition that present policies are a set-up to a potential inflationary event that’s inimical to it’s long-held policy standard of price stability.  The theory is that the ongoing rounds of Quantitative Easing will throw enough digital money to the banks – which should theoretically lead to actual physical cash amongst the public – floating through the economy that spending increases, leading to greater economic activity and recovery.  Despite all of the controversy about inflation versus deflation, the evidence from my small PracticalDad Price Index is bolstered by the recent Walmart news release that Q2 (2013) comparable store sales were flat partially due to low inflation

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PracticalDad Price Index. August 2013 – Prices Remain Flat

You’d think that with the kids growing, there’d be more time to write but a week camping with scouts, the need to finish multiple projects – and a larger foray into the generational sandwich – has left less time to spend on the site.  Oh well, life intrudes.

But there’s always time to roll through the same three grocery stores to pull together the 47 item marketbasket data for the PracticalDad Price Index.  The results however, reveal little change from the July index level as the August Total Index rose to 107.90 from July’s 107.57 (November 2010 = 100).  When the Food-Only Index of 37 items is considered, the index was essentially flat with August at 113.14 versus the July result of 113.13 (again, November 2010 = 100).  There’s honestly little notable about the results, but I’ll be watching the ground beef prices as drought in Texas and the lower midwest has caused ranchers to decrease the herd levels not seen since 1952.  The offset is that rain in the upper midwest has caused a rebound in corn and hog output.  

The results of the past four months are as follows:

Month/Year          Total Index          Food-Only Index          Spread

5/13                        107.64                 113.68                             6.04

6/13                        107.65                 113.55                             5.90

7/13                        107.57                 113.13                             5.56

8/13                        107.90                 113.14                             5.24

The simple reality is that for all of the discussion about incipient inflation, the index for 47 commonly purchased grocery items (seen here) is simply flat and has been so since reaching a peak in December 2012.