More on Inflation
Monday, March 3rd, 2008
Last week I wrote about inflation rearing its ugly little head and costing all of us more to live and run businesses, and resulting in less money at the end of the day in our pockets.
This morning in the Wall Street Journal’s Real Time Economics blog I found this quoted statement by Charles Plosser, president of the Federal Reserve Bank of Philadelphia:
Mr. Plosser said inflation expectations have been creeping up; he’s “not panicked” by the uptick but watching them closely. “We can’t wait too long for inflation expectations to materialize, otherwise you get behind the curve,” he said.
The economy has seen many periods when inflation has spiked up and then come back down, he said. “This issue of inflation is both worrisome, but also highly uncertain,” Mr. Plosser said. He said he’s concerned that price increases are showing up in more items than the typical areas like fuel. Determining whether those are transitory shocks or a signal of other changes is especially difficult now, he said.
It’s the kind of careful parsing of words you’d expect from a public figure. You didn’t actually expect him to come out and say “inflation is a major issue” did you?
But regardless of what the Federal Reserve says, many of us are experiencing inflation in a variety of ways. It’s very real when you see higher prices for gas, heating fuel, and materials.
I do agree that it remains to be seen whether inflation is a temporary situation that will even itself out.
Meanwhile, we continue to run our businesses and manage expenses keeping an eye on profit margins. Perhaps we can take comfort in the fact that there are lots of places in the world far worse off with inflation than we have it. We could be in Zimbabwe, with inflation over 1000%.
