The Christian Science Monitor reported this morning that "The rise in grocery costs is up more in the first six months of 2007 than in all of 2006." But "excluding food and energy"...inflation is fine.

The article states that corn prices are soaring due to demand for ethanol. In my June 23rd joural post, (Ethanol Demand Can Spark More Inflation) I told you that higher corn prices would create
ripple effect of higher prices for a host of other products. Well, its happening!

The Christian Science Monitor interviewed , "Patrick Jackman, an economist at the Bureau of Labor Statistics, who said, A family's average grocery tab could leap from $300 a month last year to $400 a month this year." But "excluding food and energy"...inflation is fine.

Yesterday, I went to the grocery store and was shocked to see a gallon of milk approaching $4.00/ gallon. The ripple effects from higher energy and corn prices are affecting everything from Food to Rents, Cable, Electric, Building Materials and Services.

The biggest insult to the public, and investors is the reporting of the Producer Price Index (PPI), and the Consumer Price Index (CPI).

Here is the misleading data released this morning on the Producer Price Index (PPI). "Investors instead were pleased the core PPI, which strips out often-volatile food and energy costs, posted a small 0.2 percent rise, as expected, after a flat reading in April." You can read this for yourself at: Yahoo Finance.

The Consumer Price Index (CPI) will be released tomorrow, and it is equally useless. Using the word "core" when reporting inflation data is a way to mask the truth, and gives investors with a false impression of what is really going on.

Since the CPI is used as the cost of living benchmark (COLA- Cost of Living Adjustment) to adjust Social Security payments to retiree's and the salaries of government and union employees, the numbers have been massaged in a way to make sure the Government does not have to shell out big bucks during highly inflationary periods.

Since its inception in 1921, the CPI has been revised (through trial and error), and watered down so much that inflation has been in a range of 1-5% since 1991. This makes it easier on the government to manage the COLAs for employees, not to mention being easier on the country's massive financial debt.

The next time you listen to the financial channels and get excited about the inflation rate, remember it has been within a 4% range for 15 years. Since everything inflationary has already been removed, you know it is not an accurate measure of what is affecting us.

A more accurate measure of inflation is what you are feeling in your own pocketbook. If you are feeling a little pain at the pump or the grocery store, all you have to do is "exclude what you are paying for food and energy"...and you'll see that everything is just fine.