One of our better indications of price is the import price index, and it's telling us something interesting:
Import prices rose for the second consecutive month in December and
the 1.1 percent increase was the largest monthly advance since May. The price
index for overall imports also increased for the fifth straight year in 2006,
advancing 2.5 percent after more substantial increases of 8.0 percent and 6.7
percent in 2005 and 2004, respectively.
A 4.8 percent increase in petroleum prices was the largest contributor
to the overall December rise. Petroleum prices resumed their upward trend
after declining 21.5 percent for the three-month period ended in November.
The index rose 6.2 percent overall in 2006, the fifth consecutive year the index
advanced, but the smallest annual increase over that period.
1. People are no longer worried about the dollar: after the '05 and '06 hype, it isn't deflating at the speed everyone worried about.
2. To the extent we talk about technology that gets around petroleum, the price on petroleum rises (yes, there's tension in the Middle East. But there's always tension in the Middle East.)