While Wall St. and the Federal Reserve continue to claim that inflation is virtually non-existent, Main St. knows otherwise. According to AAA, the average price for a gallon of gas has surpassed the $3 mark again, placing increased financial strain on consumers facing 9.8% official unemployment and 17.0% official underemployment. Since this time last year, the nation’s average gas price has risen almost 17%. Unseasonably cold weather in the U.S. and Europe, a weak U.S. Dollar, record deficits, the Federal Reserve’s latest money printing stimulus, and recovering stock markets are widely considered to be the primary factors in the precipitous rise in gas prices. With crude oil expected to push toward $100 a barrel again, gas prices could rise well past the $3 a gallon mark in the coming weeks.
And it’s not just gas prices, either.
Food inflation is beginning to hit Americans in the pocketbooks again. According to the Bureau of Labor Statistics, grocery prices have grown more than 1.5 times the overall rate of inflation this year. Since last year, meat, poultry, fish, and egg prices have surged 5.8%, and dairy products have risen 3.8%. Some economists are predicting as much as 2-4% food inflation in 2011, while the National Inflation Association is predicting that “food prices will take over in 2011 as America’s greatest crisis“. Rampant food inflation is already present in places like China and India.
As government economists and Wall St. analysts crow about stock market returns and subdued Consumer Price Index (CPI) readings, Main St. America is experiencing high unemployment, stagnant wages, and rising food & fuel costs. If the trend continues, 2011 could become the year of stagflation. And as we learned in 2008, food & fuel inflation are often followed by a major economic crisis.