PRICES: HOW HIGH IS UP?; Thanks in large part to exploding demand from China, two decades of low inflation are ending. But that's no cause for panic

Suddenly, there's a whiff of inflation in the air. Raw-material prices are soaring, boosted by heavy demand out of China. The dollar is weakening, pushing up the prices of goods imported into the U.S. And a host of companies - from steel mills to chemical manufacturers - are jacking up prices a...

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Bibliographic Details
Published in:Bloomberg businessweek (Online) 2004-03 (3873), p.28
Main Author: Rich Miller in Washington and Peter Coy in New York, with Dexter Roberts in Beijing, Michael Arndt in Chicago, Kathleen Kerwin in Detroit, and bureau reports
Format: Magazinearticle
Language:English
Subjects:
American dollar
Economic trends
Inflation
International trade
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Summary:Suddenly, there's a whiff of inflation in the air. Raw-material prices are soaring, boosted by heavy demand out of China. The dollar is weakening, pushing up the prices of goods imported into the U.S. And a host of companies - from steel mills to chemical manufacturers - are jacking up prices after years of being unable to get anything in the way of a hike. The bottom line: The more than two-decade-long decline in inflation that began when Paul A. Volcker took over the reins at the Federal Reserve in 1979 is over. Inflation has bottomed out and is headed up. Should people worry? Probably not. The return of corporate pricing power is not to be feared. Rather, it's a sign of an economy on the mend. Thanks to the Federal Reserve's easy monetary policy, the economy is finally gathering steam after spending three years trying to shake off the excesses of the late 1990s.
ISSN:0007-7135
2162-657X