- China has been a source of deflation but there are daily stories of inflation and price increases coming from China. Most notably, a contact of mine received a 30% price increase in the cost of clothing from their Chinese manufacturers.
- Depending on which commodity index one looks at, commodities are up between 15% and 25% this year. Were it not for the brief 2008 spike in energy prices indexes would be at all time highs.
- The newspapers are rife with stories about less discounting this holiday season.
- Con Agra has been one of the latest food companies to complain about rising input costs. They are raising prices and reducing the size of packages.
- The price at the pump is rising and brent crude trades at $93. Once oil crosses the psychologically important $100 level it will be hard for Ben Bernanke to maintain there is no inflation.
Inflationary Pressures Heating Up
Commodities have been moving up in lock step with equities. Eventually, that will disrupt the virtuous cycle I described this morning of cheap money leading to buybacks and M&A. Evidence is gathering that inflationary pressures are heating up: