Tags: Kellner | inflation | rise | government

MarketWatch's Kellner: Inflation Is on the Rise

By    |   Wednesday, 14 May 2014 09:59 AM

Government data may show that consumer prices rose only 1.5 percent in the year through March, but personal observation will tell you inflation is worse than that, says MarketWatch Chief Economist Irwin Kellner.

"I don't know about you, but everywhere I look I see prices going up. It could be year to year, month to month, or even as short a span as week to week," he writes.

"It's in visible items like food, energy, housing and, of course, healthcare. It's also in less visible items, such as contracts to service air conditioners, heating systems and motor vehicles, not to mention in income taxes, property taxes, water bills, etc."

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Food prices officially climbed 1.7 percent in the year through March, while energy prices gained 0.4 percent and healthcare prices rose 2.4 percent.

So why aren't the government inflation numbers higher?

"One reason might be that the market basket of goods and services does not adequately capture buying patterns," Kellner explains, noting that consumers often substitute more expensive goods with cheaper ones, "thus avoiding higher prices."

"Another reason might be an inability to capture hidden price increases through changes in size and quality. A third might be just plain laziness on the part of the government's surveyors."

Other economists question whether inflation will rise.

"It will take much more growth to get firms to believe that price increases can continue," Joel Naroff, a Moneynews Insider and chief economist at Naroff Economic Advisors, tells Reuters. "If businesses don't think price increases can stick, inflation is not likely to accelerate sharply anytime soon."

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Economy
Government data may show that consumer prices rose only 1.5 percent in the year through March, but personal observation will tell you inflation is worse than that, says MarketWatch Chief Economist Irwin Kellner.
Kellner, inflation, rise, government
282
2014-59-14
Wednesday, 14 May 2014 09:59 AM
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