Wednesday, November 3, 2021

Now, here and there we can hear the central bank bureaucrats telling us, that inflation is coming, yes. But slowly and not for staying here for too long -- just a temporary issue. And one that will not force them to correct their monetary experiment running for more than a dozen years, since it will be here for just a moment. Something I doubt, when we know that almost all base materials are up in double digits vs their prices twelve months ago:

  • Corn (+40%), Wheat (+30%)
  • Oil (+100%, as Heating Oil, NatGas or Gasoline)
  • Coffee & Cotton (+100%)
  • Copper (+40%)

And this in combination with all the ongoing inefficiencies and logistic problems induced by the global pandemic-motivated shut-down, that push higher cost bases, should result in a lean +5% CPI, as we see it right now in many countries, for just a wink of an eye?

I doubt. And we know, in general inflation is always starting slow and accelerating if it gets grip: reason is the competition, that simply holds back prices tending north, because the first business raising its prices is risking to get out of business against its competitors waiting to forward the impulse to its customers.

Now, we will see how everything plays out, but how economists and central bankers come to the conclusion, this would probably be already the last episode in this chapter of rising prices, is incomprehensible.