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MORE ON COMMODITIES AND INFLATION….

The following is a very good chart from Paul Krugman showing that commodity prices can be very volatile at a time when inflation remains very low.  There is obviously no close correlation between core CPI and commodity prices. Of course, this doesn’t mean we should downplay the impact of rising commodity prices.  As I described the other day, these price increases are having a very damaging impact on the economy via reallocation of incomes and by reducing corporate margins. But what the commodity price increases do not foreshadow is some horrible bout of hyperinflation.  Don’t be fooled by the gyrations in gasoline prices.  As 2008 taught us, you never know what might be lurking around the corner.  What you see is not necessarily what you get….

Source: NY Times

 

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