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Soon a loaf of bread will be more expensive than a Krugerrand. The price of gold may be rising, but the price of wheat is up more and going up faster.

"Wheat has more than doubled since May, reaching a record $11.53 a bushel on Feb. 11," according to Bloomberg. That is nothing but bad news for everyone everywhere with the possible exception of farmers.

Wheat may be a better measure of inflation than oil. It is used in a wide variety of human foods worldwide and it is also used for livestock. That means inflation by the ton. While the Fed tries to fight a slowdown along with central banks in other parts of the world, the biggest concern is that low rates may drive inflation. The cost of wheat and other grains is driving inflation all by itself. Lower interest rates are not helping at all. Rate may even have to be moved up if wheat and other commodities fuel inflation.

China said its inflation rate was just over 7% in January. But, the cost of food moved up over 15%. The same trend is likely to hit the US because of wheat and milk prices. Fundamentally, prices for grain and food are being decoupled from interest rates.

The other danger of rising grain prices is that the cost of alternative fuel goes up, in particular biofuels. They may seem like a neat way to drive down oil prices over time. That does not work if biofuel costs more than oil.

Economists will argue that the leading indicators of how things are going should be interest rates and oil prices.

That is wrong, The real indicator is wheat.

Douglas A. McIntyre