[Huck]

It's all connected to oil.

It's my understanding that it's all connected to the weak dollar. Weak dollar increases the price of oil. Inflation, I believe, is a lagging indicator. If the dollar continues to strengthen, oil prices will fall and that will work its way through the economy. Demand for oil didn't spike 150%.

[tobyhill]

The weak dollar has a 20%-30% effect on the rising cost of oil. Another 10%-20% is based on speculators and the “fear premium”. The rest is supply and demand based on a futures market. Strengthen the dollar and still oil will be over $100 a barrel. Invest in expanding domestic supplies 2 million barrels a day and prices will drop to $50-$60 a barrel.

[MrB]

I don’t think what we’re seeing is “inflation” by definition.

We’re seeing increased prices, yes, but there is a difference.

As you say, the dollar is strengthening, which is the opposite of inflation.

Inflation, economically, is “too many dollars chasing too few goods”.
It’s not that we have too little food - it’s just that transportation costs, due to lack of oil supply (this IS inflationary), have gone up.