People have been fearing the return of inflation for a couple of years now, and though it's been largely nonexistent, we may at last be seeing the beginning of it. The price of many commodities has been on the rise for about six months now: Wheat was up 47 percent in 2010, coffee beans up 77 percent, and cotton futures rose a whopping 92 percent.
That doesn't mean, though, you'll see the prices of wheat cereals or cotton shirts rising by those amounts. According to the USDA, the price of an individual commodity affects only about 7 percent of an item's final retail cost. But we're likely to feel some effect of it: An agricultural economist for Wells Fargo has forecast that food prices will rise somewhere between 3 and 4.5 percent in the coming year.
The irony is that the factor fueling this inflation isn't any governmental policy but severe weather last summer that devastated corn, soybean and coffee crops. Demand from growing economies in India and China has also helped fuel the higher prices.
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