Producer Prices in U.S. Rise 0.7%; Core Rate Up 0.1% (Update1)

Static observations, like inflation remains subdued right now, is like forecasting weather by looking outside the window. While some forecasts will be right, many others will look bad without knowledge of present and past trends.

“Inflation remains subdued,” said Joseph Brusuelas, president of Brusuelas Analytics in Stamford, Connecticut. Limited price pressure “provides an extraordinary amount of comfort to Fed policy makers. They can stay on hold well into 2011.”

Today's "subdued" action looks similar to the big commodity run from 1938 to 1951.

16-Raw Industrial Spot Price (1935-1947);
Great Britain Wholesale Price of All Commodities (1885-1935):


Despite the constant disparagement, gold continues outperform as expected.

Spot Commodity Price Index (CRBSPOT) to Gold Ratio:


Source: bloomberg.com