The complaints of inflation are insane.

[innonimatu]

I see, if a sizeable part of your income depends on international tourism 2020-21 would have been bad years yes, people travel again now though, and early indications are, they are spending the money they saved in the previous years to go further and stay away longer, in so far that flight companies have a hard time picking up the extra volume after downsizing in previous years.

I suspect this mechanism, playing in several aspects of the economy, is at least in part responsible for the rise in inflation we are seeing.

I can confirm that it is crazy tourism season indeed.

But I can also say that the inflation which most concerns people has zero to do with tourism. It does have a small impact on housing but far more relevant for housing is that building material prices have gone through the roof due to energy costs. They're very energy intensive.
It does not have an impact in food prices, where opportunistic profit taking is currently happening, but I fear that will soon be replaced by real scarcity price hikes.
It does not have a relevant impact on fuel prices, people who move for vacation don't consume oil where they lived, the place of use simply changes. Sure planes consume more but the main scarcity is diesel.

Energy is what matters most for the current inflation. One example, if Ludwigshafen closes then a lot of industries downstream which absolutely need the chemicals from there close. Stocks were already used up, there is no slack left. Farmers have seen the chemicals they need more than double in price already. Not to mention fertilizers. Plants idling haven an effect that goes down the chain with some delay.

 

[Kaitzilla]

Hot off the presses!

Inflation in the USA increased in May to an annual rate of 8.6%.

https://www.cnbc.com/2022/06/10/consumer-price-index-may-2022.html

Inflation in the USA increased in June to an annual rate of 9.1%!

How high will our central bank dare to raise rates with everyone in debt up to their eyeballs?


The euro is trading parity with the dollar now.
And a dollar gets 137 yen too.

U.S. national railroad strike is getting closer.
https://www.trains.com/trn/news-rev...-overwhelmingly-to-authorize-national-strike/

INDEPENDENCE, Ohio — By a resounding margin, members of the Brotherhood of Locomotive Engineers and Trainmen have authorized a strike — a move that could come as soon as Monday, July 18.

The union — which represents more than 57,000 U.S. rail employees — reports 99.5% of its members voted to authorize a strike if such an action becomes legal and “necessary to secure a contract worthy of their consideration,” BLET National President Dennis Pierce said in a statement issued Tuesday. It was the union’s first nationwide strike vote since 2011.

Railroads “used and continue to use their economic strength to steamroll their employees, their customers and the nation, all for the sake of their bottom line, and it is clear that they have no intentions of changing,” said Pierce, who also asserted that in the third year of the national contract negotiation process, “the rail carriers have never made a contract proposal to our union that their employees, our members, would accept.”

Unions and railroads are currently in a 30-day cooling-off period mandated under the Railway Labor Act that began after the two sides failed to reach an agreement in talks before the National Mediation Board, and unions turned down an offer of binding arbitration.

The cooling off period ends July 18, at which point the union could legally strike — unless, before that date, President Joe Biden names a Presidential Emergency Board to investigate the dispute and make recommendations for a settlement. That would block a work stoppage for another 60 days — 30 days while the board investigates and makes its report, and 30 days after the report issued.

The National Railway Labor Conference, the association which includes the railroads’ bargaining group, has said on its website that it expects such a board to be named, and business groups including the U.S. Chamber of Commerce have asked Biden to intervene. “It is imperative that the administration act to prevent any disruption to America’s rail service,” Chamber CEO Suzanne Clark said in a letter to Biden earlier this month.

In his statement, BLET’s Pierce said carriers “hide behind the provisions of the Railway Labor Act to save them from having to treat their employees fairly. … rest assured our Brotherhood is now prepared to take the next steps in the process, as we fight to reach a contract settlement that our members will accept.

Europe finds out on July 21 if Russia will turn their gas back on, or have an unexpected maintenance problem.
https://seekingalpha.com/news/38555...e-for-maintenance-will-russia-turn-it-back-on

The French economic minister says the most likely scenario is Europe is getting cut off.
https://www.businessinsider.com/rus...-off-europe-gas-supply-french-minister-2022-7

I guess Europe will turn their industry off to survive the winter?

 

[Birdjaguar]

Inflation in the USA increased in June to an annual rate of 9.1%!

From WSJ today:

Core prices, which exclude volatile food and energy components, increased by 5.9% in June from a year earlier, slightly less than May’s 6.0% gain, the Labor Department said. On a month-to-month basis, core prices rose 0.7% in June, a bit more than their 0.6% increase in May—a sign of inflationary pressures throughout the economy.

The report showed few signs of relief from higher prices. Costs were up broadly across the economy, with gasoline far outpacing other categories with an 11.2% gain over the prior month. Gasoline prices have been on a downward path in recent weeks. Shelter and food price increases were also major contributors to inflation, the Labor Department said....Despite June’s inflation reading, economists point to recent developments that could subdue price pressures in the coming months.

Investor expectations of slowing economic growth world-wide have led to a decline in commodity prices in recent weeks, including for oil, copper, wheat and corn, after those prices rose sharply following the Russian invasion of Ukraine.

 

[Farm Boy]

Wait, so it's OK because my food, my fuel(food), heat, and housing are all excluded? Do you think I was buying tvs, phones, music, and movies? Who the duck does that make inflation less bad for? People buying toys. Gotta bail them out from those commodity monsters. I can't believe we still let people speculate on that horsehocky. Jackson was a monster of a president, but he had an accurate bead on the bigger monsters with the bread runs.

 

[Birdjaguar]

Wait, so it's OK because my food, my fuel(food), heat, and housing are all excluded? Do you think I was buying tvs, phones, music, and movies? Who the duck does that make inflation less bad for? People buying toys. Gotta bail them out from those commodity monsters. I can't believe we still let people speculate on that ****. Jackson was a monster of a president, but he had an accurate bead on the bigger monsters with the bread runs.

Never said it was OK. I was just identifying the problem areas. And if you dig deeper it is the energy aspect (fuel) that is actually driving the 9%.

From NYT:

HOUSTON — Gasoline prices that surged in recent months have reversed course in July, giving consumers a welcome break. Gasoline was a major reason that U.S. consumer prices were 9.1 percent higher in June than a year earlier, the biggest annual increase in four decades. But now gas prices have declined 28 days in a row, the longest decline since the collapse in energy demand in early 2020 as the Covid-19 pandemic paralyzed the economy. Energy analysts say American consumers are spending $140 million less on gasoline daily than they were a month ago.

 

[Farm Boy]

Just stressed. Single digit inflation numbers are a lie of accounting for certain. Taxes are about to roll around again. They claim they lowered them even though the bill went up. It is a very Illinois moment.

 

[Birdjaguar]

Calendar year to date food is up 12.5% and fuel 58%.

 

[Hygro]

Wait, so it's OK because my food, my fuel(food), heat, and housing are all excluded? Do you think I was buying tvs, phones, music, and movies? Who the duck does that make inflation less bad for? People buying toys. Gotta bail them out from those commodity monsters. I can't believe we still let people speculate on that ****. Jackson was a monster of a president, but he had an accurate bead on the bigger monsters with the bread runs.

I paid $30 for mexican food and a discounted margarita yesterday. All on credit, of course. It wasn't even good.

The present scarcity sucks.

 

[Farm Boy]

Eggs are up 2.5x. Maruchan Noodle Soup is double.

 

[Samson]

From WSJ today:

The report showed few signs of relief from higher prices. Costs were up broadly across the economy, with gasoline far outpacing other categories with an 11.2% gain over the prior month.

I do not understand petrol prices. This is oil price over the last month

Spoiler Three Months :

Only ~15% over pre-war prices

 

[Gorbles]

I do not understand petrol prices. This is oil price over the last month

Spoiler Three Months :

Only ~15% over pre-war prices

Oh oh oh, I do! Me! Pick me!

https://www.theguardian.com/business/2022/may/13/oil-gas-producers-first-quarter-2022-profits
https://www.businessinsider.com/gas...ocketing-energy-sector-earnings-charts-2022-5

 

[Birdjaguar]

I do not understand petrol prices. This is oil price over the last month

The links above are good info. Rising oil prices increase the selling price placed on existing inventory that has a lower actual cost and that ripples all the way out the distribution channel to the retailer. Simple version: Exxon has inventory bought at $50/barrel. events happen and oil goes to $100/barrel. The $50 stuff is sold as if it cost $100. On the books it is still at the $50 cost so profits are pretty huge. This same process hits every step in the process from drilling all the way through to filling your gas tank.

If I am a gasoline retailer with a 20,000 gallon underground tank half-filled with fuel that cost me $2.00 a gallon and my supplier responds to a big increase in oil prices by charging me $3.00 to refill my underground tanks, then immediately I will raise the retail price on all the cheaper gasoline I already have to match the new price to refill my tanks. Instant profits.

 

[Samson]

If I am a gasoline retailer with a 20,000 gallon underground tank half-filled with fuel that cost me $2.00 a gallon and my supplier responds to a big increase in oil prices by charging me $3.00 to refill my underground tanks, then immediately I will raise the retail price on all the cheaper gasoline I already have to match the new price to refill my tanks. Instant profits.

But if I am a gasoline retailer down the road from you I keep the prices that makes me a normal profit per gallon, and all your customers come to me and I make Instant profits. Gasoline retail seems a pretty competitive market.

 

[El_Machinae]

But if I am a gasoline retailer down the road from you I keep the prices that makes me a normal profit per gallon, and all your customers come to me and I make Instant profits. Gasoline retail seems a pretty competitive market.

If they can't replace the stock with the income, they lose money

 

[Birdjaguar]

But if I am a gasoline retailer down the road from you I keep the prices that makes me a normal profit per gallon, and all your customers come to me and I make Instant profits. Gasoline retail seems a pretty competitive market.

It is very competitive, but as El Mach points out, refilling their tanks can be an issue. For retailers, the frequency with which they have to refill their tanks is an issue. Each store has to figure out its best strategy for getting customers to buy gas. Daily pricing is a game. Branded stations have different cost structures than unbranded. Convenience stores versus gas only stores have different priorities and ways to make a profit. Each neighborhood can have its own little war going one between stations. If you sell your tanks dry too quickly and before you can get refilled, well, you are out of business for a while and customers have a bad experience. The move to EVs will change things dramatically for them.

 

[El_Machinae]

But, in general if you don't charge enough to have money for the next restocking, you're gambling.

There are elements of Free Market Theory that drive profits to zero (ask farmers), and competition driving down your restocking profits can be one.

 

[Kaitzilla]

Gazprom has declared force majeure on their natural gas contracts with Germany.

Exclusive: Russia's Gazprom tells European buyers gas supply halt beyond its control

Russia's Gazprom has told customers in Europe it cannot guarantee gas supplies because of "extraordinary" circumstances, according to a letter seen by Reuters, upping the ante in an economic tit-for-tat with the West over Moscow's invasion of Ukraine.

www.reuters.com

Thursday we find out if the gas comes back on or not.

 

[RobAnybody]

But if I am a gasoline retailer down the road from you I keep the prices that makes me a normal profit per gallon, and all your customers come to me and I make Instant profits. Gasoline retail seems a pretty competitive market.

I think that's what's happening, but it's slower than what you describe & lags oil prices, because the incentives are different - i.e. you & I own nearby gas/petrol stations. When our supply prices rise rapidly, we both bump our prices up by 0.10 this week, 0.15 next week, 0.10 the next week, etc., until we've both raised our prices by 0.50. We don't really care about each other's prices at that point & we're not really concerned with undercutting each other, but rather keeping our heads above water. This can happen in a matter of days, or a couple weeks.

Then when our supply prices start dropping rapidly & we have a cushion, I might decide to lower my prices by 0.02 to undercut you a bit. Then a few days later you either match me or lower yours by 0.03. Next week I lower mine by 0.04 to again be ever-so-slightly below you. Rinse, repeat. Neither of us are in a hurry to lower our prices at the pump, but rather to just barely undercut each other. By the time we've both come back down 0.50, it's taken several weeks, or more likely months.

 

[Samson]

I thought inflation was supposed to be good for government debt?

Inflation pushes UK government interest costs in June to fresh record

Surging inflation led interest payments on UK government debt to hit the highest amount on record in June.​

Interest payments paid by the government for last month hit £19.4bn.​

It pushed government borrowing for the month up to the second-highest June level since records began in 1993.​

Borrowing - the difference between spending and tax income - was £22.9bn during the month, up by £4.1bn from a year earlier, the Office for National Statistics said.​

The interest payments were more than double the previous monthly record set in June 2021.​

​

The recent high levels of debt interest payments are largely a result of higher inflation, the Office for National Statistics (ONS) said.​

This is due to the interest paid on government bonds rising in line with the Retail Prices Index measure of inflation, which hit 11.8% in June.​

I do not understand. This site is more like what I understood:

1. Higher inflation increases nominal tax revenues (if prices are higher, the government will collect more VAT, workers pay more income tax)
2. Higher inflation reduces the real value of debt, bondholders on fixed interest rates will see a fall in the real value of their bonds and it becomes easier for the government to pay back these bonds.
3. Higher inflation can enable the government to freeze income tax thresholds so more workers pay higher tax rates – it becomes a way to increase tax revenues without increasing tax rates.

The Government (borrower) is better off, bondholders (savers) are worse off as a result of inflation.

 

[Kaitzilla]

Gazprom has declared force majeure on their natural gas contracts with Germany.

Exclusive: Russia's Gazprom tells European buyers gas supply halt beyond its control

Russia's Gazprom has told customers in Europe it cannot guarantee gas supplies because of "extraordinary" circumstances, according to a letter seen by Reuters, upping the ante in an economic tit-for-tat with the West over Moscow's invasion of Ukraine.

www.reuters.com

Thursday we find out if the gas comes back on or not.

Russia has resumed gas flows today after the maintenance ended.

Russia Resumes Nord Stream Gas Flow, Bringing Europe Respite

Russia began sending natural gas to Europe through the Nord Stream pipeline system after a pause, bringing relief to a continent whose economy is starting to wobble under the strain of reduced supplies.

www.bloomberg.com