Posted on 08/18/2008 10:16:59 AM PDT by BenLurkin
Growing evidence suggests American consumers, businesspeople, and political leaders should all be bracing for double-digit inflation, probably as early as 2009.
The relative price stability of the past 15 years is giving way to worsening inflation, despite the recent softening of oil prices. The Consumer Price Index for all items shows the inflation rate averaged 2.6% a year from 1992 through 2007 but has doubled since January, reaching an annual rate of 5.6% in July (BusinessWeek.com, 8/14/08). By next year, the monthly figure could hit double digits, and the inflation rate for 2009 overall could triple 2007's 2.85%.
...
The skyrocketing price of oil is obviously a central element in the accelerating price spiral. But a sea change in China's role (BusinessWeek, 6/19/08) is beginning to have a huge impact as well.
Increasing Commodities Pricing
Anyone who hasn't been living in a cave for the past year knows that oil prices have soared and pushed up the prices of gasoline, diesel fuel, and heating oil. Largely hidden from view, however, have been steep and continuing price increases across the whole spectrum of commodities.
...
In every sector, cost increases are so large and pervasive that producers who might once have tried to absorb or work around them are passing them on to customers as fast as they can. Dow Chemical (NYSE:DOW - News) recently announced successive price increases of 20% and 25%, plus freight surcharges, saying energy and feedstock costs had risen fourfold in five years.
China's Role
...why are we feeling the impact so suddenly?
The answer is that China can no longer bail us out with low-cost manufacturing. For years, ... That kept prices down for American consumers and also restrained pressures on wages, abetting price stability. But now costs are rising quickly in China, too (BusinessWeek.com, 8/12/08).
(Excerpt) Read more at biz.yahoo.com ...
Commodities have crashed and inflation will reside.
High gas prices were a major contributor to the most recent inflation numbers.
What share of product cost is cost of commodity/raw material?
In a car what share is
iron ore, petroleum, raw material?
labor? Management? ancilary like IT, advertising, PR, legal, HR?
What share is profit? intellectual property?, patents, etc?
What share is government regulation? taxes?
What share is commondity/roww material in Packaged food? Fresh produce? meat? dairy? In toys? In clothing?
What is increasing its share of product cost? From what I can see, the cost of government has gone up faster than the cost of commodities as a whole and is taking a bigger share of the cost.
3/4 of oil production in the world is from governments ... socialism. So is it oil that is pushing up prices? Or is it the goverments that own 75% of the oil production? Of course, the other 25% is only regulated by government.
High gas prices hasn’t dropped that much. .40 tops.
Seems like a bunch of fear-mongering with little basis in fact.
Are these guys saying that the government is going to admit to ongoing long-term inflation?
Inflation has been "residing" in the economy for 6 years. It is possible that Uncle pulled the plug on the money machine in the spring and we could be seeing a deflation getting under way. It happened when Reagan turned off the presses but I seem to recall that commodity prices took a lot longer to begin to fall and the drop was not so precipitous.
High gas prices “contributed nothing to inflation but have been largely a result of inflation. High prices of anything cannot cause inflation. Inflation causes prices to increase in nominal terms- more dollars for the same goods.
Bracing for? Where have they been the last two years? And I also agree that the commodities bubble will have popped before the "official" inflation rate catches up to the actual one.
(To the same cadence as the Dana Carvey church lady): Could it be too much Crrrredit?
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