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Is Inflation Worse Than We Think?
By JLP | April 14, 2008
I read a very interesting piece titled, The great inflation cover-up, by Elizabeth Spiers in the April 14, 2008 issue of Fortune. I agree with Elizabeth that inflation is worse than we are being told. I know this from looking at the amount that we spend at the grocery store each trip.
My theory is that all of this inflation is being driven by one thing:
The price of oil!
Think about it. As the price of oil has increased, we have started looking at fuel alternatives like corn-based ethanol. Farmers grew more corn and less of everything else, which raised the prices on all the other grains. Then, to top it off, it became more expensive to get those products to the grocery store shelves.
The problem with all of this is that according to the article, the ‘core inflation’ number that the Fed uses does not include energy and food prices because they are subject to short-term volatility. Fair enough. However, I’m thinking that this is going to be a long-term thing. I think high food and energy prices are here to stay.
Anyway, if you have some spare time, I urge you to read Elizabeth’s article in Fortune. It’s both interesting and disturbing.
Topics: Miscellaneous |