Inflation Is Getting Worse

[marmar]

from HuffPost:




Hale "Bonddad" Stewart
Inflation Is Getting Worse
Posted April 10, 2008 | 06:34 AM (EST)


From the WSJ:

After several years of relative stability, a wave of rising prices is washing over the world economy.

It comes at a most inconvenient time. The Federal Reserve is sharply cutting U.S interest rates -- the opposite of the usual response to rising inflation -- to prevent the housing bust and credit crisis from causing a deep, prolonged recession. That's making the global response to inflation more complicated.

On Wednesday, the World Bank estimated global food prices have risen 83% over the past three years, threatening recent strides in poverty reduction. The IMF forecast consumer prices in emerging and developing countries will rise 7.4% this year, the most inflation since 2001 though still well below the double-digit levels of the recent past.

From the WSJ:

Federal energy officials expect oil to average $101 a barrel this year, a sharp upward revision from its earlier forecast that suggests prices will remain above $100 for some time.

But the U.S. Energy Information Administration expects American drivers, truckers and airlines to use less fuel this year as the economy softens. That could take some pressure off prices for gasoline and other fuels, and could keep the price of gasoline under a U.S. average of $4 a gallon.

Just months ago, $100-a-barrel oil seemed an aberration -- a price surge driven by speculators that would soon slip back to more reasonable levels. But the move by the agency -- usually a price bear that had predicted $87-a-barrel oil in January -- suggests $100 oil could be the new norm this year.The arm of the U.S. Energy Department also doesn't anticipate much relief next year, when it sees prices averaging $92.50 a barrel.

Crude oil for May delivery fell 59 cents a barrel, or 0.5%, to $108.50 Tuesday on the New York Mercantile Exchange. Oil hit a record high of $110.33 March 13.

Contrary to warnings from many analysts, the agency believes gasoline prices will remain below $4 a gallon in the U.S. during the height of the summer driving season. The government sees gasoline prices peaking in June at $3.60, up from the national average of around $3.33 now. The U.S., consumer of nearly a quarter of the world's daily crude production, is expected to use 85,000 barrels a day less this year in liquid fuels than in 2007, the agency said.

No one really knows where prices will end up -- despite their best intentions and good faith efforts to try and figure it out. However, here is the basic issue with energy demand: so long as India and China are still growing at strong clips, expect more upside price pressure. Those two countries add 2 billion people to the demand side of the equation. .....(more)

The complete piece is at: http://www.huffingtonpost.com/hale-stewart/inflation-is-getting-wors_b_95983.html

[lonestarnot]

1. $112 and some change per barrel.

[IADEMO2004]

2. $112/mo. = my health insurance increase this year

nope no inflation at my house

[ramapo]

3. I have to laugh

A couple of weeks ago I was tuning the radio dial. Stopped at the local Bloomberg business outlet giving the happy news update. It went something like this..."Stocks were up slightly today recovering from the latest sell off. But if the hints that inflation is entering the mix are true.... "

Entering the mix??? WTF???

Look at the rise in housing and food over the past ten years. Never mind the recent increases in fuel. This is thought as stable prices? Oh, you mean food and energy aren't counted in the inflation statistic.

How about medical?

[angstlessk]

4. I don't think they fear inflation like they used to...remember, inflation used to lead to wage

increases. I do not think that is true this round. I think it will simply result in the poor getting poorer, the middle class losing even more ground, and no wage inflation to go along with REAL inflation..:grr: