Inflation Better Than Expected

I was watching CNBC this morning and they were discussing the report released today that stated inflation wasn’t as bad as expected. In fact, inflation was called moderate. However, the price of flour has gone up 35%, and the price of eggs has gone up 40%. How is this moderate inflation? Simple–the cost of soft durables like furniture and other home furnishings remained flat. This offset the extreme rise in food and energy prices.

That’s why the report of moderate inflation doesn’t make sense to me.

Furniture prices may not have increased, but that’s probably because fewer people are buying furniture. After all, how can they afford new furniture with the prices on food going up so dramatically. Food is something they have to purchase every day. People seldom purchase furniture, especially if they already have furniture. The price is lower because demand is lower, not because inflation is in check.

For a more technical discussion, here’s an article.

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