Inflation

[boont]

There is a school of thought that high gasoline prices is anti-inflationary.

As people pay more for gasoline their budgets shrink and therefore they have less to purchase stuff. They tend to close their wallets, the theory goes, because they must have gas but not some other things.

If so Wall Street may be panicking too soon.

On the other hand I haven't seen any stats on this.

boont

 

[mathjak107]

i would agree that oil prices can be kind of a tax in away and sucks money out of the consumer..i always thought high oil prices are doing the work of the fed because if they were lower we may have been getting 1/2 point increases in interest rates...

 

[IBWino]

I agree to a point, but eventually, high energy prices will drive up the cost of just about everything. Manufacturing, food processing and transporation can only absord higher costs for so long before being forced to pass it along to the consumer.

 

[d]

increased energy costs will impact the cost side aggrevating inflation; but will also impact the demand side, having a moderating effect.