I guarantee you that no one at AOL is anxiously waiting for the Fed money supply numbers that are issued in the Fed's H.6 release every Thursday afternoon. They are writing about price inflation because they feel it, and they think they can write about it without getting flack from their readers.
If AOL writers are noticing price inflation, it is a very ominous sign that price inflation is about to kick to the next level, where consumers start acting like prices will be higher in the future and thus cause an acceleration in the price inflation process by deciding to hold smaller cash balances.
Here are the seven inflation points AOL is warning about:
1. A Trip to the Grocery Store
The USDA forecasts a 2% to 3% hike in the cost of all foods in 2011...Expect a big spike in the dairy case and meat counter, where pork alone is forecast to rise between 3% and 4%.
Keep in mind this is AOL so they are buying into the USDA forecast of overall 2% to 3% food price increases. By the end of 2011, it's likely to be more like 10%
2. The Cost of Gas and Heating Fuel
Some fast-and-loose talk by former Shell Oil President John Hofmeister says gas will be back to $5 a gallon this year. That's about $2 more per gallon than the current average price of $3.05, says the Department of Energy.
I'm impressed with this call. AOL discussing a near doubling in the price of gasoline. Inflation at the pump. People are starting to feel it and suspect more is on the way.
3. Health Insurance and Medical CostsConsumers know that ObamaCare is not going to cut health expenses.
Blue Shield in California said it was going to raise premiums by almost 60% and you can bet that your insurer has something similar planned.
Don't look for much help from the government here. The Obama administration wants individual and small-group insurers to justify when they raise rates by 10% or more. But it's a toothless gesture.
4. The Cost of ClothingI don't think consumers are on to the coming boost in clothing prices, yet. AOL is really giving its readers a heads up on this one.
Cotton prices are on the upswing and you're going to feel it in the stitched pocket. Cotton is now 80% more expensive than it was at the start of 2010 and many manufacturers believe they have no choice but to pass it on to you.
Not surprising. The heavy government influence in education results in the entire sector being a mess.
5. Colleges and Universities
For the 2010-2011 school year, tuitions are up by almost 8% at public, four-year colleges and 4.5% at private colleges. Expect more hikes for 2011-2012 as schools try to cope with a reduction in alumni giving, state funding and more students asking for financial aid.
6. Raising KidsJust another sector where inflation is becoming obvious.
Let's face it: Kids aren't cheap. It isn't just feeding and clothing them, it's also sending them to soccer camp, arranging after-school care, paying for the math tutor. Babysitters charge as much as $12 to $15 an hour, even higher for late nights. Public schools are turning to parents to help them make up budget deficits.
7. Bank and Bank Card FeesNice touch here. AOL gets it that the Dodd-Frank Act and the new regulations is responsible for some of the increasing costs here.
Checking fees, ATM fees, safety deposit box fees, talking to a teller fees. Our bank just charged us $3 to view a check that was cashed from our account; we had forgotten who we wrote it to and clicked on the online "view" button. Silly us. Lesson learned. New banking laws have meant new banking fees.