comment on the "Bagel Index"

Jim Jubak has some very good ideas. However, this time I disagree with him. He sees a 5.4% increase in inflation in his "bagel index" and concludes that stagflation is coming next year. He says that it comes from "the price of wheat", and his baker confirms this. Here's what I see. Yes, the price of wheat is high, and going to go higher. Farmers will plant a record corn crop next year because of government ethanol subsidies, which led to record demand for corn. Before that, high energy prices led to an increase in the price of fertilizer and fuel for farm vehicles. That's the backward view. As we can see, the start of the cycle was higher energy prices. Here's the forward view. As I see it, the only thing that goes up after wheat are bagels. They've just gone up. So, rather than conclude that inflation is just gaining steam, I will conclude the opposite. Inflation has peaked.