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To: No.6

They could smooth it. This isn’t rocket science. Pick a moving average - simple or exponentially smoothed, bridge at least three futures expiry dates and start there. It would result in a better reflection of the input costs to the economy and factor out the exogenous price spikes and dips due to futures speculators.

Just sticking our heads into a hole, which is what is being done now, is far more useless and is being partly reflected in the decline of the USD.


47 posted on 11/29/2007 9:52:55 AM PST by NVDave
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To: NVDave

The prices of volatile items do filter into everything else in exactly the method you yourself describe:

“What has been going up is the “fuel surcharge” on the bottom of the bill. I’d like to know for certain whether these pass-through fuel surcharges are actually being computed into the PPI, because what is being reported for PPI and what I see in my input costs don’t come even remotely close to congruence.”

Obviously not only in your situation but every good that gets sent anywhere producers and retailers pass along the increased fuel cost. In that way the volatile costs get reflected in the prices of everything else.

Also obviously the local appliance store does not raise or lower its prices like crazy just because the truck bringing refrigerators charged more one month and less the next. Instead the refrigerator’s price rises based on the trend, which is exactly the smoothing you mention.


48 posted on 11/29/2007 10:41:05 AM PST by No.6 (www.fourthfightergroup.com)
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