Tags: Food | Price | Inflation

Food-Price Inflation Showing Signs of Easing

Wednesday, 21 Dec 2011 07:54 AM

While the Federal Reserve insists inflation rates remain within comfort zones, food and energy prices have soared in 2011.

Gasoline prices often move on cyclical factors, such as spikes during the northern hemisphere's summer, when driving increases as well as on fears that ongoing Middle East unrest will disrupt supply.

Food prices have risen on increased demand globally as well as due to weather events, but the good news is that grocery prices will ease their advance, according to the Wall Street Journal, citing government data.
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"Grocery bills last month increased at a slightly slower pace than they had during previous months. The cost of food climbed 4.6 percent in November from a year earlier, compared with a 4.7 percent gain in October," the Journal reports.

"The rising cost of basic goods — rent also has been on an upswing — has been a burden on consumers beset with high unemployment and slow income growth."

Fed officials often make interest-rate decisions based on the behavior of core inflation rates, which are stripped volatile food and energy prices, with logic being that despite the pain people feel at the pump and at the grocery store, such volatile inflationary pressures don't stem from underlying demand and therefore, shouldn't heavily influence changes in benchmark lending rates.

Overall inflation came in flat in November.

"It was obviously softer than the market was expecting. We were actually surprised we didn't see even more weakness given the heavy round of discounting during the initial holiday shopping session," says Jacob Oubina, Senior U.S. Economist at RBC Capital Markets in New York, according to Reuters.

"Inflation is probably at the point where it's cresting right now on a year on year basis. It will remain sticky around 2 percent for the first half of next year and then tick down to 1.8 percent. I think the Fed would very happy with that."

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While the Federal Reserve insists inflation rates remain within comfort zones, food and energy prices have soared in 2011. Gasoline prices often move on cyclical factors, such as spikes during the northern hemisphere's summer, when driving increases as well as on fears...
Food,Price,Inflation
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2011-54-21
 

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