Yeah piezoe, gas has gone from about 1.60 a gallon to 2.50 a gallon in no time at all around where I live. Since energy costs factor in the price of so many other things, hard to believe they say inflation is so low.
The effect of labor costs on CPI is bigger than gasoline's -- and labor costs have been flat to down, possibly for many more months from here.
What we've seen over the last 5-10 years is labor costs in real terms actually declining (due mainly to competition from overseas)... while prices of many things increasing. Movie tickets Haircuts Health insurance Restaurant menu prices... though they have a few specials now Taxes, fees Lots of others.. Unless there is strong protectionism, labor will lag further behind taxes, fees, more government, inflation.... The standard of living for most Americans is going DOWN...
What we will have is hyper stagflation, IMO. Wages go noplace except those controlled by CPI, and the real cost of living keeps rising. Net effect is a lower standard of living and a debased and devalued dollar, at best.
Much of the "real cost of living" is influenced directly by percentage growth of wages and disposable income (and much less by % change in gasoline prices or soybean meal). Rents, cleaning lady, getting a haircut, legal costs, pool maintenance etc. etc. Food and beverages are 15%, transportation is 18%. Both are dwarfed by the CPI's owners equivalent rent @ 42%. (see http://www.nytimes.com/interactive/2008/05/03/business/20080403_SPENDING_GRAPHIC.html ) It's hard for the "real costs of living" to go parabolic (as the inflation bulls are claiming) while nominal wages are plunging or grinding sideways. You can't have it both ways.
A 'deflation search' shows an exponential rise in 'deflation' talk just as well. Nice try though. http://news.google.com/archivesearc...flation&scoring=t&q=deflation&lnav=od&btnG=Go