Inflation may be coming back

Inflation may be coming back February 15, 2017

-WIN-signPrices rose in January more than they have for four years.  And the effect is not just due to rising oil and gasoline prices.  Many observers are predicting that inflation is going to be an issue again, after years of stability.

Some are worried about the new administration’s economic policy, with the combination of tax cuts, increased spending, and protectionist trade policies being a classic formula for inflation.  Read this analysis.

I suspect a lot of you don’t remember the “Great Inflation” of the 1970s, with Nixon imposing wage and price controls, Carter overseeing inflation rates in the double digits, government mandated price freezes that created gasoline shortages and bare shelves in the supermarkets.

Do you think a revival of inflation is likely?  Trump’s economic policy is being criticized, but it hasn’t even been enacted yet.  There are rumors that it will contain massive program cuts that might offset increased infrastructure and military spending.  What do you think will happen?

From US wholesale inflation sees biggest monthly gain in 4 years, AFP:

US wholesale inflation continued its upward trend in January, recording its largest monthly gain in more than four years, according to data released Tuesday by the Labor Department.

The Producer Price Index, which measures prices from the seller’s perspective, rose 0.6 percent in seasonally adjusted figures, which was the largest such gain since September 2012 and well above an analyst consensus forecast of 0.3 percent.

Excluding food and energy, the index saw a monthly gain of 0.4 percent.

Year over year, however, the figure was unchanged at 1.6 percent, unadjusted.

“In short, fairly strong and not just because of energy,” Jim O’Sullivan, chief US economist at High Frequency Economics, wrote in a client note.

[Keep reading. . .] 

Photo courtesy of the Gerald R. Ford Presidential Museum.  Public Domain.

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