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Inflation Nation Expert Examines Rising Costs of Imported Goods



Mike Larson takes a closer look at rising costs of goods imported from abroad. Mr. Larson discusses how the slumping dollar and the inflationary trend is being seen worldwide.



In the month of April, the cost of goods imported from abroad jumped 1.8%. More importantly, the year-over-year rate of import inflation soared to 15.4%. The U.S. has never seen import prices increase this much since the government began tracking such figures in 1982. Also in April, ex-petroleum import prices were up 1.1% and up 6.2% from a year earlier, the fastest rise since 1988. Additionally, food and beverage prices rose 0.4% on the month, industrial supply prices rose 3.9%, capital goods prices rose 0.8% and consumer goods prices gained 0.2%. Overall, the cost of goods coming to U.S. shores from Asia, Europe, and elsewhere is rising due to the slumping dollar and the general inflationary trend being seen worldwide.



The latest CPI report showed that the overall CPI rose 0.2% in April, down from a gain of 0.3% in March. Meanwhile, the core (ex-food and energy) CPI gained only 0.1%. That brings the year-over-year rate in CPI inflation down to 3.9% from 4%, and leaves the core CPI year-over-year gain at 2.3%, down from 2.4%.



At least one part of the CPI report reflected what is actually happening: Food prices surged 0.9% in April, the single-biggest monthly increase since January 1990.



"I don't know when the Federal Reserve will start raising rates again. I know that they should do so as soon as possible. Even if you buy the 3.9% year-over-year rise in April's CPI data, you still end up with a deeply negative real federal funds rate of -1.9% (2% nominal funds rate minus 3.9% inflation rate). All else being equal, that's an interest rate policy that essentially underwrites inflation and asset bubbles," Larson exclaims.



To read this issue online, please visit:


http://www.moneyandmarkets.com/Issues.aspxInflation-Nation-1788



About Mike Larson and Money and Markets


Mike Larson joined the company in 2001, and has more than 10 years of experience researching and writing about personal finance, investing, and the housing and mortgage industry. In 2003, Mr. Larson was named associate editor of the company's monthly Safe Money Report. In this role, he is responsible for writing and editing as well as analyzing trading opportunities for clients. Mr. Larson is also a regular contributor to the company's daily e-letter, Money and Markets.



Before joining Weiss Research, Mr. Larson was a personal finance reporter for Bankrate.com where he wrote extensively on mortgage lending, banking, residential real estate, and Federal Reserve Board policy. His responsibilities included analyzing economic data and interest rate trends for a weekly column and developing rate forecasts for a regular index feature. Previously, Mr. Larson held positions at Bloomberg News and the Boston Herald.



Recognized as an interest rate and mortgage market expert, Mr. Larson's views have been quoted in the Washington Post, Chicago Tribune, Dow Jones Newswires, Reuters, Sun-Sentinel and the Palm Beach Post. He has also appeared as an investment expert to discuss the housing market on CNBC, CNN, and Bloomberg Television. His writing has been acknowledged by both the National Association of Real Estate Editors and the Massachusetts Press Association.



Among the first analysts to call the housing slide, Mr. Larson's new policy paper, "How Federal Regulators, Lenders and Wall Street Created America's Housing Crisis: Nine Proposals for a Long-Term Recovery" has received broad media coverage following its July 2007 submission to the Federal Reserve and FDIC. Mr. Larson holds B.A. and B.S. degrees from Boston University.



Money and Markets (www.moneyandmarkets.com) is a free daily investment newsletter from Dr. Martin Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Weiss Research, Inc. is located in Jupiter, Florida. For more information about our editors, or to set up an interview, please contact Jennifer Moran at 561-627-3300 or visit www.moneyandmarkets.com.






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