In keeping with the tradition of believing the Emperor Has New Clothes, the U.S. consumer must try to just imagine that inflation isn’t a problem. The cost of goods imported into the U.S. rose in December, led by higher prices for commodities such as fuels and food. Import prices surged by 1.1% last month after jumping by a revised upward 1.5% gain in November.
For all of 2010, import prices were up 4.8%. However, the costs of imported food and petroleum were both up over 13% last year. The U.S. dollar is down about 10% on the DXY, since it achieved a cyclical high on June 7th of last year. The weakness in the U.S. currency has helped send the cost of imported goods higher.
The Labor Department will release data on Producer Prices tomorrow and Consumer inflation on January 14th. Official inflation data should be on the rise as food, fuel and rental prices continue to escalate. In fact, the USDA is expected to confirm today that stock piles of grains are the lowest in years. The price of oil is now holding above $90 per barrel and food prices are surging across the globe. And Bernanke still looses sleep over deflation!?