Consumer prices rise 0.2% in September

The Labor Department reported today that consumer prices rose .2% in September 09, double the increase in August. For the year, prices have declined 1.3% on a not seasonally adjusted basis.

From the release:

The seasonally adjusted increase in the all items index was broad based, although tempered by a decline in the food index. The all items less food and energy index increased 0.2 percent in September after increasing 0.1 percent in each of the previous two months. Contributing to this increase were advances in the indexes for lodging away from home, medical care, new vehicles, used cars and trucks, and public transportation. The increase occurred despite declines in the indexes for rent and owners' equivalent rent, the first decreases in those indexes since 1992. The energy index also increased in September, as increases in the indexes for gasoline, fuel oil and electricity more than offset a decline in the index for natural gas.

In contrast to these increases, the food index declined, falling for the sixth time in the last eight months. The index for food away from home increased, but the food at home index declined as the indexes for fruits and vegetables and for meats, poultry, fish and eggs fell sharply. Both the food and energy indexes have declined over the past 12 months. The decline in the food index is the first 12-month decrease in that index in over 40 years.

Here are a couple of things to think about:

• Inflation for the year was negative but it has been increasing on a month-to-month basis.
• The stock market and commodity prices are surging. This is generating wealth that is being fed into the system.
• With every recession, the Fed and economists said there wasn't any inflation until it was already too late. The low rates precipitated the development of investment bubbles. Indeed, during the past two recessions and recoveries, inflation has stayed relatively low and the inflation has occurred in asset value - tech stocks, real estate.

For now, we're still mired in a recession but the rapidly inflating stock market is a sure indication that prices (even if just asset prices) are re-inflating.