Tags: inflation | economy | prices | data

Inflation Almost Nonexistent, According to Data

By    |   Sunday, 28 June 2015 05:36 PM

There are many ways to measure inflation and there are problems with all of them.

While there will never be a perfect inflation gauge, a broad-based look at commodities is probably the best available measure of inflation.

Commodities are freely traded and show real-time prices based on supply and demand.

Government policies do influence supply and demand but those factors are incorporated into the market price. Traders will try to benefit from government policies so the market price includes the impact of all government edicts.

Over the past year, almost all commodity prices are down. Cocoa, the best performing commodity, shows a gain of 8 percent. Cocoa is actually the only gainer among major commodities. Oil is down more than 40 percent and most commodities show declines of at least 20 percent.

Because commodities are the raw ingredients of all goods sold in the economy, the down trend in commodities indicates there are no natural inflationary pressures.

This doesn’t mean there is no chance of inflation. As always, inflation could be created by rapidly increasing the minimum wage, rising healthcare costs or other politician-created disasters. However, there are no signs that these pressures will increase prices in the short run.

With commodity prices trending down, inflation should remain near zero. This means if the Federal Reserve raises interest rates this year, it will be a symbolic move demonstrating they still have the power to move rates and markets. It’s likely traders will sell every market on the news, worried about how far the Fed will go.

Investors looking for ideas to profit from the Fed’s eventual posturing should consider inverse commodity funds that rise in value when commodities decline. These ETFs have been among the biggest winners of the past year and could be among the best performers in the second half of 2015.

© 2019 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
MichaelCarr
There are many ways to measure inflation and there are problems with all of them. While there will never be a perfect inflation gauge, a broad-based look at commodities is probably the best available measure of inflation.
inflation, economy, prices, data
304
2015-36-28
Sunday, 28 June 2015 05:36 PM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved