The hope and aim of the Fed Chairman, Ben Bernanke, is that all of the liquidity that’s being injected into the system will cause prices to rise as inflation takes hold. The fear of many is that he’ll succeed and the general public is now catching up with the econophiles as they try to determine if this is going to happen. After hearing friends comment about how this or that went up in price, I went ahead and started the PracticalDad Price Index to publicly follow the course of prices amongst a market basket of 47 items.
It seems that Walmart has been keeping its own internal survey of about 86 items and the Walmart purchasers are expecting prices to rise in the coming months. Apart from the intellectual exercise of trying to stretch the family dollar even further, people should be concerned because these prices will be concentrated amongst the major producers of items that are composed of commodities such as wheat and sugar. These are precisely the commodity items that have been the recipients of a significant portion of the funds that the Fed has injected into the economy via the financial system. As quantitative easing kicks in over the coming months, more funds will be funneled by the financial sector to commodities that in turn sends the price up further.
If I read the article correctly, the prices haven’t actually hit the shelves yet so shoppers are safe. But they’re coming and we’ll be following them publicly on a monthly basis.