Look at the PCE deflator and it too has gone from a 2.0% rate to 1.8 % today, and the core has slowed to from 1.8% to 1.1%. And that has occurred, my friends, with oil going up three-fold over this period. The bottom line is that commodity prices, as powerful a source of inflation as they may well once have been in past decades, are no antidote for deflating wages and rents in the context of a hugely oversupplied market for labour and real estate (not to mention that we have about 30% of U.S. manufacturing capacity sitting idle). Moreover, the inflationists may want to check out what the monetary aggregates are doing right now — the trend M2 has stagnated and MZM is contracting. One final point — what sort of inflation can realistically be squeezed out of the economy when 1 in every 10 strip malls in the United States have at least one store that is sitting vacant (see today’s Lex column on page 12 of the FT)?