Now that the first quarter of 2011 is over, let’s take a look at the percent change in the futures markets…
Cotton is up 34%, heating oil is up 24% (going into the summer), corn a solid 22%, lean hogs up 21%, cattle up 15%, coffee up 9%…
In the US, the food component as a percentage of overall CPI is 7.8%. In China it is 31.4%. In India 47.1%. The US CPI is a completely irrelevant metric when it comes to actual, real life.
William Dudley, president of the Fed Bank of New York was asked about surging food and gas prices. “Today you can buy an iPad 2 that costs the same as an iPad 1 that is twice as powerful,” he said. “You have to look at the prices of all things.” The response from the crowd: “I can’t eat an iPad!”
Stable iPad prices aren’t toppling tyrants in the Middle East. Nor did they get us into another (don’t call it) war, this time in the
broccoli oil exporting country of Libya.
If food prices were to double, US CPI would go up by 7.8%, while in China it would grow by nearly 50%.
CPI: worthless. Dudley: in touch (screen).