Inflation, Inflation Everywhere -- Almost

As measured for the overall economy, inflation has been pretty tame in the last few years, coming in at just 1.5 percent for all of 2010. Low inflation may soon be just a pleasant memory, though, if commodity prices stay on their current path. Everything's going up, and in a big way. Except for one important component.

There are already signs at the consumer level, as excellent MoneyWatch blogger Carla Fried pointed out last week: citing gasoline that's up 14 percent and some food prices up five percent, she says the ring of the cash register doesn't square with the government's reports of just 1.5 percent inflation overall.

The one that is stuck in my craw is health insurance -- I am self-employed and have a high-deductible health savings account, and just paid 15 percent more for my 2011 premium. They also had the temerity to raise my deductible by a thousand bucks.

And I'm sorry to say that it looks as though more is on the way. Corn is up 80 percent from a year ago, at $6.56 a bushel, not yet as high as the spike to $7.50 in 2008. Beef prices are well past the 2008 peak. Across the board, practically everything is up 20 percent. Sooner or later this has to make its way into the prices of what we buy. Do you remember that there were riots in Central Europe and Africa in 2008 over food prices?

Here are some charts showing three-year history for beef and soybeans -- click on them to see the full-size image. (You can look at a complete table of energy, metals and food commodities prices on the web site of the Financial Times.) Investment managers that I talk to expect world food demand to increase as a result of the strong growth in China, India and other emerging markets, so we're not likely to get a break there.

The Financial Times today reports that steel prices are forecast to rise by something like 30 percent this year, based on a poll of industry experts. One fellow predicted a 60 percent rise. That follows an increase of 33 percent in the past two months for basic steel. About one-tenth of U.S. consumer spending is for durable goods, and you have to figure steel plays a part there.

The one major input to the economic equation that's not going up is wages. Annual increases to the employment cost index for private employers compiled by the Bureau of Labor Statistics averaged three percent-plus from 2002 through 2008, but for the last two years have come in below two percent.

So we consumers have some catching up to do, as well as tough decisions to make on our budgets. But with so much unemployment and spare capacity, it's hard to see wages increasing on a broad scale any time soon.