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06/25/2005 Archived Entry: "Gordon on inflation"

Gordon P. writes, Just had one of those singular experiences that seems to put something into a stark clear perspective --- and while I'm not _entirely_ certain said perspective is valid, it at least _suggests_ that the U.S. inflation may definitely be starting to heat up --- FedGov claims to the contrary notwithstanding. Click on "more" to continue reading.

Last week, I visited Brad and Wendy in Canada to attend the Shaw festival. I happened to buy a half dozen apples while I was there --- and because of that, I happen to remember the price of apples in Canada, as well as the posted exchange rate (US$ 1.00 = CDN$ 1.25) at the Duty-Free shop where I stopped to get a (partial) reimbursement for Canada's GST (Goods and Services Tax).

So, imagine my surprise when I went shopping to re-stock my fridge, and saw _the exact same US dollar price for each variety of apple_ as I saw in Canadian dollars while visiting Canada. E.g., Royal Gala and Pink Lady apples were both US$ 1.79/lb and CDN$ 1.79/lb; Braeburn and Fuji apples were both US$ 1.49/lb and CDN$ 1.498/lb, and Red and Golden Delicious apples were both US$ 1.24/lb and CDN$ 1.24/lb.

Now granted, six varieties of apple do not a diverse shopping-basket make, nor are prices necessarily comparable in a rural Canadian IGA versus a Jewel/Osco in an affluent U.S. suburb. However, it still suggests that produce prices may now be _as much as 25% higher in the U.S. than in Canada_. This would seem to me to provide a particularly graphic illustration that the U.S. may be entering a period of runaway inflation ---
U.S. FedGov claims to the contrary notwithstanding...

Gordon's observations pretty much echo my own. Like the Economist, I use a Big Mac index to compare the buying power of different currencies. Both Canada and the States price their Big Macs at the same numerical value, even though Canada's currency is supposed worth about 75 to 80% of the US dollar and you would expect a burger to be priced at a higher value.

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