Inflation Rates

I spent hours and hours to understand the relationship to the CPI Index, Inflation and Fed Funds rates. I wasn’t thrilled with my findings as I saw a cozy and deeply close relationship so I ran M2 money supplies and money velocities. No changes, A deep relationship.

The key is Inflation is a price paid for consumer goods. Consumer goods skyrocketed therefore Inflation rates must follow. Inflation rates is not a monetary phenomenon nor derived as result to central banks, money, interest rates or the CPI Index. Pretty simple.

The problem is located in the economy somewhere as prices just skyrocketed everywhere. Why and where did this derive to see 8.5 Inflation is the real question.

Here’s the latest 12 month Prices paid index.

All items 8.5%

Food 8.8%

Food at home 10.0%

Cereals and bakery products 9.4%

Meats, poultry, fish, and eggs 13.7%

Dairy and related products 7.0%

Fruits and vegetables 8.5%

Nonalcoholic beverages and beverage materials 8.0%

Other food at home 10.3%

Food away from home 6.9%

Full service meals and snacks 8.0%

Limited service meals and snacks 7.2%

Energy 32.0%

Energy commodities 48.3%

Fuel oil 70.1%

Gasoline (all types) 48.0%

Energy services 13.5%

Electricity 11.1%

Natural gas (piped) 21.6%

All items less food and energy 6.5%

Commodities less food and energy commodities 11.7%

Apparel 6.8%

New vehicles 12.5%

Used cars and trucks 35.3%

Medical care commodities 2.7%

Alcoholic beverages 3.7%

Tobacco and smoking products 6.9%

Services less energy services 4.7%

Shelter 5.0%

Rent of primary residence 4.4%

Owners’ equivalent rent of residences 4.5%

Medical care services 2.9%

Physicians’ services 0.7%

Hospital services 3.3%

Transportation services 7.7%

Motor vehicle maintenance and repair 4.9%

Motor vehicle insurance 4.2%

Airline fare 23.6%

Brian Twomey

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