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Economic Numbers and Inflation

Interesting economic numbers this morning....watch the inflation numbers.

Philly Fed WAY AHEAD of expectationsat 35.9 (21 was consensus), the highest level since January 2004...that is notable.... stocks have been moving off their lows since that report came out at 10 AM ET.

Also notable is an increase in the prices paid component of that report, another sign of inflation.

Speaking of inflation...CPI and Core CPI both one-tenth point higher than expected...but look under the hood....the food index rose by 0.5% in January...

The Federal Reserve, unfortunately, continues to cite backward-looking data in its defense of its policies...and the year-over-year change in CPI does indeed look benign for 2010: 1.5 percent on the headline and up 0.8 percent on Core. Unfortunately, that is not what is happening now...I've noted that food and metal producers have consistently reported higher input costs this earnings season and are raising prices....just this morning JM Smucker reporting raising coffee prices 10 percent, while Dr. Pepper Snapple reported higher packaging and ingredient costs will raise its cost of goods sold by 6 to 7 pecent.

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