The U.S. Producer Price Index (PPI) and Consumer Price Index (CPI) both fell in October. Those declines – combined with sharp downward spirals in worldwide stock and commodity prices – have caused many analysts, and even central bankers, to worry that we are on the brink of deflation.

Such concerns may be warranted in the short-term. But in the long run, deflation won’t be the challenge we face.

Thanks to an overly aggressive central bank, and more than $1.5 trillion in U.S. Treasury Department bailout programs – as well as other factors related to the ongoing global financial crisis – inflation will be the problem that ultimately bedevils us.

As long as oil and commodity prices drop, the PPI and CPI indices, which include oil and commodity prices, also will fall. Such a decline, however, does not constitute deflation; it is simply a one-time price adjustment. This is particularly true if most

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The U.S. Producer Price Index (PPI) and Consumer Price Index (CPI) both fell in October. Those declines – combined with sharp downward spirals in worldwide stock and commodity prices – have caused many analysts, and even central bankers, to worry that we are on the brink of deflation. Such concerns may be warranted in the short-term. But in the long run, deflation won’t be the challenge we face. Thanks to an overly aggressive central bank, and more than $1.5 trillion in U.S. Treasury Department bailout programs – as well as other factors related to the ongoing global financial crisis – inflation will be the problem that ultimately bedevils us. As long as oil and commodity prices drop, the PPI and CPI indices, which include oil and commodity prices, also will fall. Such a decline, however, does not constitute deflation; it is simply a one-time ...

The Estonian recession continues to deepen, month by month. The most recent evidence comes to us in the form of a decline in both Estonian retail sales and industrial production, which fell in each case for the fifth consecutive month in September, leading us to expect the rate of GDP contraction to accelerate further in Q3.

Retail Sales Fall An Annual 8%Retail sales, excluding cars and fuel, fell by an annual 8 percent in August, the largest such decline registered since at least 2001. This follows a 6 percent in August. The year on year chart (see below) couldn't be clearer.Sales were also down month on month (ie with respect to August), this time by a non seasonally adjusted 7%. In fact, on a seasonally adjusted basis retail sales peaked in February 2008, and have been trending down

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Make no mistake: we are in uncharted territory. Hank Paulson wants $700 billion of taxpayer’s money to buy up bad debt and ‘rescue’ the markets.Some lawmakers strongly opposed to the plan.

“The free market for all intents and purposes is dead in America,” said Senator Jim Bunning, Republican of Kentucky, on Friday.

Justice Litle says the plan is a minefield for investors. He says there are five things you need to know about the government bailout and what it means for your portfolio.

This from Taipan Publishing:

1) The bailout is one of staggeringly massive proportions.

As I write to you in the wee hours of Monday morning, prior to my transatlantic flight, the number being bandied about for the size of the bailout is $700 billion. Keep in mind, too, that this is an opening number. It doesn’t necessarily include relief for upside-down homeowners, strapped consumers, foreign banks or many other potential “extras” that …

Article Source The Bureau of Labor Statistics reported yesterday that its primary consumer price index CPI-U rose 5.6% over the last year. That's the highest inflation rate in 17 years, the newspapers all call to our attention. Just how concerned should we be about these numbers? Of that 5.6% year-over-year price increase, 1.9% came within the last two months alone. And there's no question that the big story driving that 2-month increase has been energy prices. NewJerseyGasPrices.com reports that the average retail price of gasoline sold in the United States rose from about $3.78/gallon in the middle of May to $4.12 in mid July, a 9% increase. That's in line with the 10.6% 2-month increase that BLS reported in their seasonally adjusted consumer energy price index between May and July. Energy prices have a weight near 10% in the total ...

Article Source My previous post regarding government statistics elicited a lot of commentary, with a tremendous amount of vitriolic commentary directed at the current approach to calculating the CPI. Rather than provide more of my own thoughts on what constitutes an appropriate mix of theory and pragmatism, I will quote from the author whose work I had to read in graduate school, W. Erwin Diewert. From his entry in the 1998 Journal of Economic Perspectives which had a symposium on the Boskin commission report: Defining a true cost of living index must begin on the household level, and then move to the social level. The Konuis (1939) true cost of living index for a single household is defined as the ratio of the minimum costs of achieving a certain reference utility level in a base period, given the prices prevailing at that time, and at a later "current" period, ...

What to watch: Thursday, May 29: U.S. Revised Q1 GDP; Friday, May 30: CPI for April (May for select metropolitan areas); April - Industrial Production; April - Household income and expenditure survey; April - New housing starts; April - Unemployment and Ratio of Job Offers to Applicants Ongoing: Commodities and forex volatility — more inflation reporting chicanery. Protectionist tendencies may be pressured by a report (and the realization) of $3.2 billion in cross-shareholding losses in FY2007, as well as greater urgency from within for acceptance of foreign investment. In the meantime, we can enjoy watching the latest round of TCI (The Children’s Investment Fund (UK)) vs. J-Power (JP: 9513). Markets: The Nikkei starts the week against a shortened U.S. trading week for the Memorial Day holiday. Making matters worse is last Friday’s bout of selling that did ...