That´s Kathleen Madigan in her WSJ column today. First she “blows”:
Wheat is not oil.
The drought in parts of the U.S. farm region has caused prices for commodities including corn, wheat and soybeans to jump this summer. But the rise in farm prices won’t have anywhere near the negative impact on consumer inflation that would come from a similar gain in oil.
Then she “bites”, not letting us forget the Fed has a well-defined inflation target to protect:
If no other price pressures build, future inflation would remain close to the Federal Reserve‘s 2% target rate.
Perhaps the bigger worry in the food price outlook is the possible impact on foreign wages. Food makes up a much larger share of total inflation in emerging economies. If businesses in emerging markets have to make higher cost-of-living pay increases to their workers, higher labor costs might lift prices of imports coming to the U.S.
That hasn’t shown up in the import price data yet, but a persistent uptrend in global food prices could change the dynamic.
Seriously, I think she put on her namesake comedian hat before writing the piece!