Ask our venerable Federal Chairman Bernanke if prices are higher and he will tell you that, “I think the increase will be transitory, that it will pass, and we will go back to a level of inflation that is consistent with our price stability mandate”. Tell that to the people struggling to pay their rent, their grocery bills and their gas bills:
Rent:
U.S. apartment rents climbed 5 percent in the 12 months through April, according to research company Axiometrics Inc. Effective rents in the first quarter, or what tenants actually paid, rose in 75 of the 82 markets tracked by data provider Reis Inc., which said the average was up 2.5 percent from a year earlier to $991 a month.
Retail food prices will jump more than the US Department of Agriculture’s estimate of 3 per cent to 4 per cent this year, said Chad Hart, an economist at Iowa State University.
Companies will pass along more of their higher costs for the rest of the year, said Bill Lapp, a former ConAgra Foods chief economist. Groceries and restaurant meals rose 2.4 per cent in the first four months, the most to start a year since 1990.
High prices at the pump are putting a squeeze on the family budget as the traditional summer driving season begins. For every $10 the typical household earns before taxes, almost a full dollar now goes toward gas, a 40 percent bigger bite than normal.
Households spent an average of $369 on gas last month. In April 2009, they spent just $201. Families now spend more filling up than they spend on cars, clothes or recreation. Last year, they spent less on gasoline than each of those things.
The failure of U.S. wages to keep pace with inflation threatens to leave economic growth sluggish and forecasts for a strong pick-up in output later this year may prove too optimistic.
Average hourly earnings rose a measly three cents, or 0.1 percent, in April from March, the government said on Friday. Over the past year, they are up a modest 1.9 percent.
The destruction of the dollar through 0% Fed Fund’s policy and burgeoning government debt just might not be transitory. Ask those workers who did not get any sort of raise if Mr. Bernanke is providing them with relief through his interest rate policies. I doubt it….but all of those risky borrowers who took out a lot of debt, congrats on winning the Fed’s favor.
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