Where is the inflation?

Agriculture and energy commodiites, with a broad commodity index, weekly, August 2007 to August 2012

I’ve written before about what I view as the big elephant in the room today, inflation, but where is our unwelcome guest? Is it likely he’s slowly approaching and going to make a grand entrance in our lives? I kinda think so, and here is why. The chart above shows weekly prices for three important commodity series since the start of the credit crunch. Specifically, the S&P GSCI Agricultural Index ($GKX, black line) is up 71%, the S&P GSCI Commodity Index ($GNX, red line) is up 35% and the S&P GSCI Energy Index ($GJX, green line) is up 33% over the past five years. The chart below shows CPI for housing and housing alone, up some 5% across the last five years.

It seems that while food and energy costs have surged across term, especially so since the 2009 market nadirs, housing – thanks largely to the housing bubble bursting it would seem – has masked much of the overall inflation. But still its there, as anyone who has purchased food recently can attest. In fact food prices are surging so much the UN is warning about possible famine as global stockpiles plummet. Clearly, there is substantial inflation already in system and getting ready to whack us, hard. Looks like the first waves will hit PPI in maybe one to three months, and CPI in six to nine. Time to stockpile.

US Housing CPI, August 2007 to August 2012, monthly

US Housing CPI, August 2007 to August 2012, monthly

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