Inflation 'Round the World

Faithful and unfaithful readers alike will have noticed a recurring theme in our recent reckonings. We refer, of course, to inflation; that insidious, noxious tax which appears to be gushing out of every economic orifice in the land, but that, somehow, fails to register as even a drip on the government’s official inflation-o-meter. Curious, no?

Regular reckoner, Chris Mayer, identified inflation as the “wrecking ball” of 2011 in his column “Inflation’s First Phase”. Eric Fry addressed it in both “When Stock Market Rallies Validate Effective Monetary Policy” and “Tracing the Fed’s Vital Role in the Decline of the US Dollar”. And our Reckon-in-Chief, Bill Bonner, touches on it in some fashion, on most days.

In fact, most people in possession of at least one of the five basic human senses seems to see, feel, hear, taste or smell inflation’s foul presence. Which means that those trained specifically to keep an eye (ear, nose, etc.) out for it – and who so adamantly deny its existence – are either blessed with a sixth “masking” sense to which the rest of us are not privy…or that they are simply senseless morons, blinded by the light of their own academic brilliance.

Most likely, inflation will continue to be…and not to be. In other words, those manning the controls in the government’s “Ministry of Information” will continue to churn out numbers that agree with whatever qualitatively-eased, policy-of-the-month they are pursuing. Meanwhile, the rest of us will continue to weather the adverse consequences of these econo-commands as they express themselves in the form of everyday higher prices.

This time last week, we heard from some of our frontline reporters across the United States. Fellow reckoners wrote in from grocery stores and gas pumps around the country to lend some of their own boots-on-ground perspective.

Alas, this academically-defined non-inflation is also pushing up prices in other parts of the world. But fear not. We have eyes (ears, noses, etc.) in those parts, too. And so, without further ado, we present a handful of reader mail from some international Daily Reckoning reader posts…

First up, here’s what reader B.L. had to say:

“I currently live in Singapore and travel throughout Asia Pac, Central Europe, ANZ, and was back in the US over Christmas/New Year’s. I see food inflation everywhere I go. [In] Singapore the prices have risen noticeably since I’ve been living there, which was April of 2010. When I was in the US – North Carolina – I was shocked by the food prices when I bought groceries for two families for New Year’s Eve and day. Combine the food prices with the fuel price rise and I can see why so many American families are getting support for food from good ole Uncle Sam.

“In places like China or India, where food makes up a huge % of a families cost to live – over 50% versus less than 10% for the middle class in the US – they are really feeling the pinch.

“Lots of reasons, but very scary for those of us that have to eat – oh wait, that is all of us last time I checked on the human condition.

“Keep up the good work.”

Sticking in the East for a bit, here’s what another reckoner had to say:

“Here in Thailand, inflation is running high.

“On January 1st, 7/11 mini-marts, of which there are thousands across the country, increased all their prices by 10%.

“Hotel rates, mostly in the 4 and 5 stars categories, are going through the roof, 25 to 50% higher than a year ago.

“Restaurants of all kinds regularly increase their prices.

“Overall, the national inflation rate is certainly in the double digits.”

Thailand? But why would prices be rising in Thailand? Another reckoner, based in that (offensively gorgeous) part of the world offers some thoughts:

“The millions of dollars flowing into Thailand form your neck of the woods is causing real problems with food prices and more noticeable is the increase in washing powder, soap etc. These too are increasing due to the raw material costs.

“Cambodia and Vietnam are feeling the winds of change also. I live here in Thailand 6 months a year then go home to shitty Britain to fish for trout. I was in Cambodia last week. My friend has just opened a small guest house there and we both went to see friends in Vietnam. Same problem; big inflows of money.

“I hope this adds a new thinking to your insight into inflation.”

But what about Japan, the leader in all things DEflationary? Reckoner Gary?

“I live in Japan, and have observed over the past year, food prices have gone down. In fact, prices have been about the same for many years. Last year flour was about Yen 230 a kilo, this year about Yen 150. Living on a fixed income, I must say, I like DEFLATION much more than INFLATION. So tell me, why is Bernanke trying to increase my food costs – doesn’t he have my interests at heart?

“The US system is broke, financially, economically, morally, education, etc. And with all the partisan fighting in government, Republican vs. Democrats, secret agendas, it isn’t going to get better. I think the best solution is to just let all those banks and zombie companies crash and burn, and we start over again.”

Hmm…but what about this… Another email from The Land of the Setting Sun? This one from Reckoner Matthew:

“One small slab of mozzarella cheese imported from Germany costs about 600 Yen, or 7.26 US doll hairs. A small pack of blueberries from Chile costs about the same. These items have become extravagances for consumers.

“How about gasoline? Just filled up my car with a tank of the stuff. Converting liters to gallons and Yen to USD, I paid 6.64 dollars/gallon (high octane, mind you) at today’s exchange rate.

“Try guessing what will happen to the USA when prices get to this point? Here in Nipponville, everyone’s numb to it all.”

And in Australia, Reckoner Ronald:

“The cost of our city-supplied water has tripled in the last ten years. In the last 29 years, the local daily newspaper has quadrupled in price and the TV weekly magazine is up 625%. But petrol (gasoline) is ‘only’ up 308%.”

How about in Europe? Reckoner Paul?

“After taking 2 weeks holiday around Christmas, I returned to my commuting routine to my office in Hamburg, Germany. Between the station and my office, I usually pick up breakfast at one of many bakeries. Between 18 Dec. 2010 & 3 Jan. 2011, my breakfast cost went up on average 3%. Oh My! 10 cents more for my apple turnover or chocolate croissant!”

And finally this observation from Buenos Aires, where your editor experiences daily the effect of government-induced non-inflation…

“Argentina is a good example of food inflation. Meat (main food for most locals) is now 100 % more expensive than a year before, as a result of government controls and policies against production, just in order to maintain local prices in line. Result: less production, less consumption and less exports of an Argentine symbol. Is this a recipe to be applied in other countries?”

A big thanks to everyone who wrote in with frontline reports on the effects of inflation that, we are told, doesn’t exist.

Joel Bowman
for The Daily Reckoning

The Daily Reckoning