The FOMC meets Tuesday and the flat core CPI will be a focus as will the drop in inflation expectations one year out (notwithstanding the unch level 5 yrs out) in the UoM data. One thing they should but may not focus too much on are commodity prices. As of last night’s close, the CRB Raw Industrials sub index of 22 commodities that are “either raw materials or products close to the initial production stage” broke out to the highest level since May ’08 and at 517.3, is just 8.5 pts from a record high reached the same month. Included in the index are metals, textiles/fibers, livestock and products, fats/oils, foodstuffs and other raw industrials. A company’s costs are more than just commodities of course as labor is a majority of them but margin pressure can still occur if prices can’t be passed on. Thus, whether businesses feel the impact or consumers do, inflation pressures are clearly evident to those looking at market signals.
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