By Cees Bruggemans, Chief Economist FNB

Are we really fighting inflation?

There are times when understanding inflation is easy. Big demands are placed on all resources, shortages arise, profit margins can be inflated, cost and price increases easily passed on, in a spiraling kind of way.

Expectations of accelerating price increases (faster inflation) become embedded and feed the inflation spiral.

Handling that is easy. You hit it on the head. Less easy to handle is the output sacrifice incurred along the way as demand falls, resource slack builds up, discipline is restored to expectations and price acceleration is with difficulty transformed into price deceleration, even price freezing or declines.

Output sacrifice implies pain. Reduced real wages. Unemployment. Hardship. Always difficult to accommodate, especially in a democracy where leadership incompetence is quickly criticized (”You owe me full employment, a rising living standard and everything I haven’t got yet. Deliver or

There are all sorts of catalysts that could send oil prices even higher. We are getting just a small dose of the action today and energy-related stocks are surging.

It must feel good to be part of OPEC these days. Now that the threat of $30 per oil is clearly in the past, the oil cartel is regaining some of the power it so quickly lost last fall.

The group of oil producers continues to claim $75 per barrel is its target price for crude, calling it “fair” for everybody involved. Who is to debate what is arguably the most powerful group of countries on the planet?

What OPEC wants, it gets. What are the alternatives? Wind, solar, tides? Doubt it.

As an oil-burning American with a propensity to drop a few Franklins into the gas tank on a weekend adventure, the thought of oil climbing to the cartel’s target range is frightening.

But

There are all sorts of catalysts that could send oil prices even higher. We are getting just a small dose of the action today and energy-related stocks are surging.

It must feel good to be part of OPEC these days. Now that the threat of $30 per oil is clearly in the past, the oil cartel is regaining some of the power it so quickly lost last fall.

The group of oil producers continues to claim $75 per barrel is its target price for crude, calling it “fair” for everybody involved. Who is to debate what is arguably the most powerful group of countries on the planet?

What OPEC wants, it gets. What are the alternatives? Wind, solar, tides? Doubt it.

As an oil-burning American with a propensity to drop a few Franklins into the gas tank on a weekend adventure, the thought of oil climbing to the cartel’s target range is frightening.

But