Bank of Italy analysts paint a desolate picture of weak consumption and rising inflation.
Sustained higher prices at the pump will act as a drag on GDP by obstructing consumption, yet inflation remains at comfortable levels for the Fed, which is expected to continue with its ultra-accommodative monetary stance.
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The proof of its efficacy will be months away in data that track jobs, inflation and consumption.
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"Food inflation hurts consumption, government finances, the balance of payments and monetary policy flexibility, " Atsi Sheth, a senior analyst at Moody's, wrote in a note.
According to the U.S. Department of Commerce, the pre-financial crisis peak in personal consumption (adjusted for inflation) was in the fourth calendar quarter of 2007.
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Cembalest points out three main risks: inflation, how consumption is financed, and structural impediments to growth.
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Meantime, the latest U.S. personal consumption expenditures (PCE) inflation rate was 0.9 per cent, annualized.
The RBI has long contended that the government should reduce its budget deficit, which the central bank blames for stoking inflation by encouraging consumption, and for crowding private borrowers out of the capital markets.
The move by the commodity-consuming juggernaut China was not a big surprise, as its monetary officials are working to control inflation by curtailing domestic consumption.
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He notes that with little fanfare the Fed recently switched its inflation benchmark from the Personal Consumption Expenditure deflator to the Consumer Price Index.
The Fed closely watches a cumbersome-sounding index, the core personal consumption expenditure deflator, for signs of inflation, and in the last few months, that indicator has dropped within the range Bernanke has been looking for--after three years of coming in above his range.
Some economists worry that booming wages and consumption will dangerously widen the trade deficit and bring back inflation.
Many analysts have said that stoking inflation is key to spurring Japan's domestic consumption.
Of course, the core CPI and the core personal consumption deflator (to be revised in July) argue that inflation excluding energy was somewhat contained through March.
Inflation, as measured by the core personal-consumption-expenditure deflator (excluding food and energy) fell to 0.7% at an annual rate in the third quarter, its lowest since 1962.
The policies have seen Japan's central bank, the Bank of Japan, double its inflation target to 2% in attempt to spur domestic consumption.
Add this to the fact that there is claimed to be a deficit of new gold mined above consumption, gold should enjoy upward price pressure, with or without runaway inflation.
The Bank of Japan has also raised its inflation target to 2% in a further attempt to boost domestic consumption.
Others blame weak demand, as high inflation, falling real wages and fears for the future discourage household consumption.
Another measure of core inflation that we monitor closely, based on the price index for personal consumption expenditures excluding food and energy, shows a similar pattern.
The bigger issue for copper will be future consumption, particularly as the government continues to try to tame the economy in an effort to control inflation, Gross said.
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With lower oil quotes, our inflation rate is containable, consumer sentiment stays strong, savings rates run low and personal consumption expenditures grow between 2 and 3 percent as does GDP.
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If inflation is defined as a fall in the value of money then the price of future consumption matters as much as the price of goods and services consumed today.
Greenspan explains that because lower deficits will restore confidence, diminish the threat of inflation, and allow savings to flow to private-sector investment rather than public-sector consumption, the short-term pain will lead to gains both in the mid- and long-term.
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