Investors gird for post-recession inflation

Brushing aside statistics that show an annual inflation rate of less than zero, investors already are selling off dollars and driving up the price of gold in anticipation of a surge in prices as soon as the economy recovers from its deep recession.

Many economists think deflation is still a greater worry, but the fear of inflation has prompted a reprise of last year’s speculative interest in oil and other commodities, which this decade have proved to be good hedges against inflation. That, in turn, can be a self-fulfilling strategy, as pouring money into commodities drives up prices.

Energy prices rose sharply this spring and summer, driven by the revived speculative interest and expectations of a global recovery, but recently have leveled off to about $70 a barrel. The jump in gasoline and other energy prices caused the annualized rate of inflation in the past three months to surge to 4.4 percent, although prices overall remain down from year-ago levels.

Raymond J. Keating, chief economist for the Small Business & Entrepreneurship Council, cited the energy- related surge as reason to worry about inflation. “That’s pretty darn hot,” he said. “Even with an underperforming economic recovery, high inflation can in no way be ruled out.”

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