Food in the CPI Basket

[don]

A Food Chart To Keep Handy

From Morgan Stanley's latest Global Monetary Analyst report, this chart will give you an indication of where food price rises will hit the most.

Meanwhile, this is a good point about the effects of monetary policy on food inflation:
Transitory supply shocks to relative prices – not fertile ground for monetary policy action: In the face of repeated shocks to food prices and therefore to headline inflation, should central banks not respond with some form of monetary tightening? The answer lies in the reason behind the inflation in food prices. Food prices have risen because of global supply shocks (as La Niña plays havoc with temperatures, rain and wind) as well as local ones. These supply shocks are transitory in nature and are clearly not something that central bankers can ease with tighter policy. Tighter monetary policy would not help for at least two reasons: i) it would not lead to a faster resolution of these supply problems; and ii) it is a blunt tool that is better equipped to deal with aggregate price shocks rather than relative price movements such as food price inflation.

http://www.businessinsider.com/food-...#ixzz1BaL59FzS

[we_are_toast]

Re: Food in the CPI Basket

This is very interesting.

Here's some recent inflation numbers for Peru.

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2010 0.44 0.84 0.76 0.76 1.04 1.64 1.82 2.31 2.37 2.10 2.22 2.15
2009 6.53 5.49 4.78 4.64 4.21 3.06 2.68 1.87 1.20 0.71 0.29 0.25
2008 4.15 4.82 5.55 5.52 5.39 5.71 5.79 6.27 6.22 6.54 6.75 6.65

Now something isn't right here. With Peru having nearly half it's CPI consisting of food, I would expect much higher CPI numbers. There's also an enormous housing bubble building in Peru. But Peru's reported numbers may be as reliable as China's.

[GRG55]

Re: Food in the CPI Basket

This is very interesting.

Here's some recent inflation numbers for Peru.

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2010 0.44 0.84 0.76 0.76 1.04 1.64 1.82 2.31 2.37 2.10 2.22 2.15
2009 6.53 5.49 4.78 4.64 4.21 3.06 2.68 1.87 1.20 0.71 0.29 0.25
2008 4.15 4.82 5.55 5.52 5.39 5.71 5.79 6.27 6.22 6.54 6.75 6.65

Now something isn't right here. With Peru having nearly half it's CPI consisting of food, I would expect much higher CPI numbers. There's also an enormous housing bubble building in Peru. But Peru's reported numbers may be as reliable as China's.

It would appear that the chart is "headline" CPI, not the much-loved by Central Bankers "core" inflation, which in the USA at least excludes food and energy, non? Perhaps the reported Peru inflation numbers are also "core"...

[shiny!]

Re: Food in the CPI Basket

If the following is true, currency devaluations, not poor crops, are the main cause of rising food prices:

Disinformation Fog Intensifies as Economic Turmoil Develops

Lie: Food Inflation Caused By “Bad Growing Season”

It would appear that the “mystery” of exploding food prices has been solved, and according to a USDA report released this month, the culprit is “weak agricultural output” causing a diminished supply of staple grains in the U.S.:

http://www.usda.gov/oce/commodity/wasde/latest.pdf

This release was so shocking to markets because the report’s figures were so far below the USDA’s original estimates for harvest at the middle of this year, but why should we care about the USDA’s estimates? Are they not arbitrary? Why not look at the actual output for previous years compared to 2010 and get a real sense of what is happening?

If we are going to compare the crop outputs of 2010 to 2009, we should also keep in mind that 2009 was a record year for agricultural production. Did the USDA really assume that 2010 would meet or surpass such a bumper crop?

http://www.businesspundit.com/usda-c...cord-harvests/

Corn harvests reportedly dropped 5% compared to last year, however, 2010 was still the third largest crop on record. Soybean production was down only 1% from 2009. Cotton (not edible, but still important) was up 50% from 2009. Wheat was down less than 1% from 2009. One of the only grains affected in a substantial way in 2010 was Sorghum. The crop yield for Sorghum dropped 10% compared to 2009, but the planting area used in 2010 was 19% less than a year before, so this drop was to be expected:

http://www.farms.com/FarmsPages/Comm...x?NewsID=37813

What does this mean? The U.S. had a GOOD year for crop output, not a bad one. And what about Russia’s summer disaster wheat crop? Are our exports picking up the slack of bad harvests overseas, causing prices to rise? Actually, warmer Russian weather in November spurred wheat production, helping alleviate the weaker summer yields:

http://www.allbusiness.com/agricultu...5345042-1.html

Are there dangers in world grain output due to weather? Yes, but not enough to warrant a doubling of commodity prices. The REAL concern of agriculturalists, not just in Russia but in many nations, has not been the weather, but the ever expanding costs of production itself! From fuels to fertilizers, the process of growing food is becoming more and more expensive. What is facilitating this surging cost of production? How about the one factor that no one seems to want to discuss; the devaluation of major currencies, most especially the dollar?

I find it interesting that so much disinformation on supply and demand in commodities is hitting the news streams just as the Dollar and the Euro begin to unhinge. In my view, this engineered hysteria is meant to distract us from the collapse of our currency, and to create plausible scapegoats for the inevitable ill effects that devaluation will bring.

This is only one subject the article covers. It's well worth reading in its entirety.

[we_are_toast]

Re: Food in the CPI Basket

It would appear that the chart is "headline" CPI, not the much-loved by Central Bankers "core" inflation, which in the USA at least excludes food and energy, non? Perhaps the reported Peru inflation numbers are also "core"...

Good point. You sent me searching.

Maybe the rise in food prices simply hasn't impacted the CPI numbers yet.

Minister says some impact on inflation unavoidable

* Central bank raised interest rates this month (Adds quote from finance minister, background)

Jan 18 (Reuters) - Peru's Finance Minister Ismael Benavides said on Tuesday that high international food and energy prices will impact inflation in Peru.

Peru's central bank raised its benchmark interest rate earlier this month in a surprise move to 3.25 percent from 3 percent to curb inflation expectations but has said the move did not necessarily mean consecutive hikes in coming months.

"When prices remain high for such a long time, they will affect prices for consumers," Benavides told Reuters. "There will be some impact on inflation in Peru in the next few months, it's not something we can avoid."

Inflation has been relatively mild in Peru despite surging economic growth and this year is forecast to fall within the central bank's target range of between 1 percent and 3 percent.

Inflation last year was 2.08 percent and Peru has seen some of the lowest price increases in Latin America over the past few years.

Peru imports most of its wheat, which in 2008 caused local inflation to accelerate.

Benavides also said the country's economic growth rate for December 2010 will be high, though slightly less than in November. The economy grew 9.98 percent in November from the same period a year ago.

We have connections in Peru, and everything I hear from down there reminds me of what's happening in China. The current president was also president during the hyperinflation days of the late 80's. It'll be interesting to see if he will crash the construction bubble in order to prevent inflation.

[lektrode]

Re: Food in the CPI Basket

If the following is true, currency devaluations, not poor crops, are the main cause of rising food prices:

Disinformation Fog Intensifies as Economic Turmoil Develops

This is only one subject the article covers. It's well worth reading in its entirety.

would appear thats precisely whats goin on...

and where the hell is mega today?
GOLD = GETTING KILLED, silver doing its usual thing, but the silver lease rates are up?

[metalman]

Re: Food in the CPI Basket

chart from last year...

[Mega]

Re: Food in the CPI Basket

Metal
Hi, not seen you for awhile...........hows life?

[metalman]

Re: Food in the CPI Basket

Metal
Hi, not seen you for awhile...........hows life?

had family issues, mate, but it all worked out. you sure you want an american wife?