Mark Dolliver’s Takes: The Unlikely Villain – Inflation

Consumers worry, quite rightly, about rising unemployment and falling stock markets. But they must draw some comfort from the fact that inflation has been negligible in recent years. Mustn’t they? So we might suppose. Instead, though, surveys find that Americans feel beset by rising prices. In a Harris Poll on the daily hassles of life, respondents were asked to identify the ones that affected them in the past month. The top vote-getter was “rising prices,” cited by 69 percent. That put it ahead of such competitors as “having too many things to do” (62 percent), “concerns about money for emergencies” (51 percent) and “concerns about health in general” (47 percent). A poll by Decision Analyst (summarized in the chart below) also found much lamentation about rising prices. If this is how people feel in a sustained period of price stability, one wonders how they’ll react if prices actually do rise sharply. Why the current disjuncture between perception and a largely non-inflationary reality? Perhaps it’s because gasoline prices have been climbing. As we’ve remarked in the past, Americans get unhinged by gas-price increases in a way they don’t by other sorts of inflation. Thus, marketers should take worried note of a new Energy Department forecast that pump prices will go up steadily during the next several months, even in the absence of a war in Iraq.