"The two-year upswing in commodity prices led many to fear a return to significant inflation that would engulf the overall economy. Most commodity prices, however, peaked earlier this year--copper and sugar prices topped out in February, cotton followed suit in March. Silver prices started their collapse in early May, as did crude oil.
Many commodity bulls see this as a short-lived price correction. I disagree, seeing it as a foreshadowing of further declines that will result from a hard economic landing in China, the world's biggest user of commodities. The reversal of commodity inflation would support my forecast of looming deflation, not serious inflation, in the years ahead.
When we talk about inflation or deflation, we usually mean what is measured by the consumer price index, producer price index, GDP deflator, or other measures of aggregate price movements. In my recent book, The Age of Deleveraging: Investment strategies for a decade of slow growth and deflation, I've identified seven varieties of inflation/deflation that need to be kept in mind as the arguments over inflation and deflation play out in the months and years to come"...........READ MORE
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