[It's] inflation that isn't (because government doesn't count it anymore).
The quantitative easing and stimulus money are working their way into the commodity sector which is allowing the dogs of inflation to slip their leashes and work their havoc.
Take a look at the way food prices are being driven to unseemly high levels once again just as they were in 2008.
Corn is coming up on $5.00, wheat is more than $7.00, soybeans are over $10, sugar is over $0.24/pound, cotton is closing in on $1.00, coffee is up near $2.00 pound wholesale (which is a 13 year high), cattle are just shy of $1.00/pound, bellies are trading over $1.50/pound for fresh product.
What does it all mean?
It means the consumer is on the verge of watching his disposal income be decimated by high food prices.
In Canada this comes at a time when most Canadians are living paycheque to paycheque and are saddled with the highest levels of household/mortgage debt ever. Disposable income is at an all time low. In the USA, a record number of Americans are on food stamps and are either unemployed or underemployed.
The only saving grace is that energy prices have not YET begun moving up alongside the rest of the commodity complex. But it's only a matter of time. When the crude complex gets involved you will see home heating bills, home cooling bills, industrial energy costs and gasoline prices join the list of soaring costs nationwide.
Well 7 months down the road and we see that the CEO of Walmart has this warning Americans that U.S. consumers face "serious" inflation in the months ahead for clothing, food and other products.
Walmart says that "every single retailer has and is paying more for the items they sell, and retailers will be passing some of these costs along. Except for fuel costs, U.S. consumers haven't seen much in the way of inflation for almost a decade, so a broad-based increase in prices will be unprecedented in recent memory."
Read that again... inflation will be unprecedented in recent memory.
But since governments in both American and Canada changed the way they calculate inflation starting in 2000, 'official' statistics will claim there is no inflation. Which means that as workers try to negotiate wage increases to offset the ravaging effects of higher costs in just about everything important, they will be denied as employers hide behind the government sham that is the Consumer Price Index.
You may have already noticed the rising cost of things on your pocketbook. But the reality is that you haven't seen anything yet.
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