Tuesday, April 24 , 2018, 6:32 pm | Partly Cloudy 56º

 
 
 
 

Business

Inflation Is Here to Stay, Local Expert Says

Jeff Grange of Crowell, Weedon & Co. describes a disconnect between economists and consumers on the effects of rising food and gas prices

U.S. import prices rose again in March, and experts are predicting a rise in the Producer Price Index and Consumer Price Index when they are unveiled this week.

Import prices are up 2.7 percent, according to the Bureau of Labor Statistics. It is the largest jump since it rose by the same rate in June 2009. Prices excluding fuel rose 0.6 percent.

The rising price of imports correlate to the U.S. dollar weakening as entities such as the European Central Bank and China raise interest rates, said Jeff Grange, a financial advisor with Crowell, Weeden & Co.

“By the U.S. saying we’re going to keep interest rates low for an extended period of time, the dollar will fall, which certainly hurts when we buy abroad but makes it easier for companies to sell products abroad,” he said.

Imported fuel jumped 9 percent, the largest monthly rise since a 16 percent hike in June 2009. With the national average for a gallon of gas rising 25 percent in a month to $3.78, according to GasBuddy.com, the upward trend of the CPI and PPI is likely to continue. There was a 1.6 percent gain in February’s PPI, driven by higher food and fuel costs.

“Prices at the gas pump and food prices are so volatile that most economists don’t take those into core inflation,” Grange said, “but to common consumers we don’t get to choose, we have to eat and buy gas, and that can impact consumer spending on a discretionary level.”

Retail food prices rose 4.2 percent, the largest advance since July 1994. Wholesale food prices rose 3.9 percent in February, which have been on the rise since October 2009, and retail prices have been up since December 2009.

March’s PPI will be released Thursday, and the CPI will be released Friday, which showed a half-percent gain in February on top of a 0.4 percent hike in January.

“Inflation for the consumer is here and will continue to stay here,” Grange said, “but for the Fed who takes out the cost of food and energy, they are still more concerned about deflation and are not likely to raise interest rates for the near term.”

But he said a little inflation might benefit the housing market.

“A little inflation is healthy, and if the dollar continues to depreciate it may bring more people into the housing market to buy homes,” Grange said.

Shoppers are spending more money on electronics, furniture and apparel, according to the Commerce Department. Excluding volatile categories such as autos, gas and building materials, retailers posted a 0.4 percent gain in March compared with the previous month.

“The consumers are feeling better about the overall economy and are starting to spend,” Grange said. “They are being more realistic but starting to open up their pocketbooks.”

But that increase was the smallest this year. Sales at gas stations jumped 2.6 percent, one of the biggest spikes of any category. Spending on cars and at online retailers and department stores all declined.

Noozhawk staff writer Alex Kacik can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Become a fan of Noozhawk on Facebook.

  • Ask
  • Vote
  • Investigate
  • Answer

Noozhawk Asks: What’s Your Question?

Welcome to Noozhawk Asks, a new feature in which you ask the questions, you help decide what Noozhawk investigates, and you work with us to find the answers.

Here’s how it works: You share your questions with us in the nearby box. In some cases, we may work with you to find the answers. In others, we may ask you to vote on your top choices to help us narrow the scope. And we’ll be regularly asking you for your feedback on a specific issue or topic.

We also expect to work together with the reader who asked the winning questions to find the answer together. Noozhawk’s objective is to come at questions from a place of curiosity and openness, and we believe a transparent collaboration is the key to achieve it.

The results of our investigation will be published here in this Noozhawk Asks section. Once or twice a month, we plan to do a review of what was asked and answered.

Thanks for asking!

Click Here to Get Started >

Support Noozhawk Today

You are an important ally in our mission to deliver clear, objective, high-quality professional news reporting for Santa Barbara, Goleta and the rest of Santa Barbara County. Join the Hawks Club today to help keep Noozhawk soaring.

We offer four membership levels: $5 a month, $10 a month, $25 a month or $1 a week. Payments can be made through PayPal below, or click here for information on recurring credit-card payments.

Thank you for your vital support.


Maestro, Mastercard, Visa, American Express, Discover, Debit

Reader Comments

Noozhawk is no longer accepting reader comments on our articles. Click here for the announcement. Readers are instead invited to submit letters to the editor by emailing them to [email protected]. Please provide your full name and community, as well as contact information for verification purposes only.

Daily Noozhawk

Subscribe to Noozhawk's A.M. Report, our free e-Bulletin sent out every day at 4:15 a.m. with Noozhawk's top stories, hand-picked by the editors.

Sign Up Now >

Meet Your Realtor Sponsored by Village Properties

Photo of John Sener
John Sener
"I am known for tenacity, diligence, honesty, and sound decision making with the ultimate goal of closing every transaction to the satisfaction of all involved parties."

Full Profile >