Pita Bread Inflation Signal

I absolutely love eating Syrian pita bread. I can eat it anytime of the day. For breakfast, I eat it with some garlic hummus. For lunch or dinner, I eat it as pita sandwich rolls. I even make them into garlic pita chips as snack. It is such a versatile bread!

I usually get my stash of Syrian pita bread from a Pakistani ethnic grocer. I buy 6 packets, place them in the freezer, and take them out as needed. When I went to my grocer this week to replace my depleted stash, I learned that he had increased the price of one packet of pita bread from $1.75 to $2.00. Coming in the wake his recent price hike of the pita bread only just a few months ago from $1.50 to $1.75, I was surprised. I can still remember the days (three years ago) when the same packet of pita bread cost me only $0.50!

The Pakistani grocer shrugged his shoulders, and said he had no choice because his wholesalers had increased the price on their side. Then he launched into a gloomy account on the state of the US economy, noting that he used to sell 100 pita bread packets in one week compared to the 50 he was doing now.

I suppose I should not have been so surprised. After all, I did note the increases in prices from milk to green vegetables when grocery shopping these few months - my household expenditure on food items have increased. But it took the pita bread price increase for it to truly register in my mind. Grocers, such as the Pakistani, was merely passing the cost done the line to the consumers. When the price of bread increases dramatically, there is a reason for it.

America has a growing inflation problem. For the first time since 1981, wholesale prices rose by 7.4%, mostly driven by rising food and energy costs. The dollar has weakened against many world currencies. For instance, there was a spectacular move last week on the EUR/USD pair when the EUR strengthened strongly against the US dollar; it has still not corrected, and maybe will not for a long time (and I am losing money on the pair as I write). Then there is the falling house prices. All of this despite the Fed's lowering of the overnight interest rates to 3 percent from 5.25 percent in five steps since mid-September last year. And possibly more cuts to come, when the Fed meets again on March 18.

Rising energy prices, declining values for the dollar and the house, tightening credit and volatile stock and forex markets. There are no quick fixes to this.

Suddenly, I feel a whole lot poorer. And I know I am not alone.