Slow-cooking Inflation

Inflation remains on the rise despite a weak global economy. The U.S. GDP deflator rose to 2.2 percent in 2011 from 1.2 percent in 2010, and China’s rose to 8.3 percent from 7.4 percent. Monetary expansion around the world will work into prices. It may inflate some asset prices along the way, but will eventually become inflation through the path of least resistance, i.e. inflating prices of goods with low supply flexibility.