This week is a biggie on the inflation front, with import price data out this morning and the Consumer Price Index coming tomorrow. So what did the April numbers show? That import inflation is simply out of control. Consider:
* Import prices jumped 1.8% on the month, bigger than the 1.6% increase that economists were expecting. More importantly, the year-over-year rate of import inflation is up to a whopping 15.4% (vs. 14.9% in March). As you can see in the chart above, this is the fastest rate of import inflation in the history of the data series, which goes back to 1982.
* What about the details? Ex-petroleum import prices were up 1.1% on the month, and up 6.2% YOY. That's the fastest rise since 1988. Even if you strip out all fuels, you get a 1% monthly rise and a 5.8% YOY increase.
* Food and beverage prices were up 0.4% on the month (12.6% YOY), industrial supply prices rose 3.9% (37.3% YOY!), capital goods prices were up 0.8% (2.1% YOY), and consumer goods prices gained 0.2% (2.8% YOY). As you know, I have also been watching the price of imports from China. They increased once again -- though the monthly gain moderated to 0.2% from 0.6% in March. Chinese imports are up 4.1% in price from a year ago.
Another key piece of data: The retail sales
report from April was in line with expectations -- down 0.2%. But if you strip out autos, you get a 0.5% rise, better than the 0.2% increase economists were expecting.
Look, I'm sorry if this sounds hyperbolic, but these inflation rates are out of control. Out of control. We are talking about a year-over-year import inflation rate of more than 15% -- the most ever (figures go back to 1982). In his satellite-delivered remarks
to the Federal Reserve Bank of Atlanta Financial Markets Conference in Sea Island, Georgia today, Fed Chairman Ben Bernanke
focused exclusively on conditions in financial markets, and the Fed's efforts to boost liquidity. But somebody at the Fed better step up and start sounding the inflation alarm.
Bond traders aren't waiting around, by the way. They're selling -- long bond futures were recently down 19/32 in price. The yield on the 2-year Treasury Note has surged 12 basis points to 2.42%.