On TheStreet.com videos today, Jim Cramer noted that a recent term from Merrill Lynch on ‘Ag-Flation’ is a real risk just like China related inflation. The ethanol mandates recently have driven up costs around the entire grain and farming complex and presidential mandates are driving prices up across the board. Now the government even allows the companies to get together on pricing. He noted the comments out of Buffalo Wild Wings (BWLD) talking about the cost of chicken wings.
You can decide this for yourself whether you think he is right or even timely on this, but what he noted here does actually have a serious trail ahead across many sectors that will translate to higher prices you and I pay at the register. If grain and corn costs are higher at the same time that gasoline and other energy is higher, then it drives prices considerably higher all the way up and down the food supply and distribution chains. At least the Labor Department’s "core CPI" hides the ex-food and energy (and healthcare and anything else the public spends more and more money on). This is normally too "macro-economic" of a call for us to note, but it is something that after two years of higher prices is starting to show itself more and more on the consumer end.
Jon C. Ogg
May 8, 2007
Jon Ogg can be reached at firstname.lastname@example.org; he does not own securities in any of the companies he covers.