Is the long-rumored spate of inflation finally coming home to the American economy? The turmoil in the Middle East, as we discussed recently, looks like it will have a serious effect on our oil prices. Oil is now at its highest price level since September 2008 - the month the banking sector collapsed and brought down our whole economy with it.
Remember, the price of oil affects not just how much we pay at the pump, but a whole host of industries. Airline tickets will cost more, but oranges being trucked up from Florida could also see a jump in price. Still, Fed chairman Ben Bernanke thinks the spike in prices should be just a "temporary and relatively modest increase in U.S. consumer price inflation."
At the same time, the American manufacturing sector continues to rebound strongly. In February, manufacturing grew at its fastest rate in seven years, according to the Institute for Supply Management. We may be seeing the American economy return to normal - which would include an inflation rate closer to 2 to 4 percent, rather than the 1 to 2 percent we've had for the past couple of years.
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