As you can see in this month's chart, the inflation rate was virtually identical from February through April.

The MIP is currently projecting a very slight drop for May but I sincerely doubt it.

Gas prices will drive the inflation rate up sooner rather than later.

The MIP is projecting rates above the key rate of 5% by year end. At 5% inflation begins to impact those on the edge of the economy causing them to suffer as prices increase on a monthly basis while wages increase on an annual basis (if they are lucky). Or possibly not at all if they are working for minimum wage.

Remember that inflation is compound interest in reverse. So compounding inflation at a 5% rate will result in a rapidly deteriorating standard of livng.

Note:  FED chairman Bernanke's massive increases in the money supply almost guarantee massive inflation over the longer term.

See FED Bails Out Borrowers for more information.

See Annual Inflation Chart for further discussion on this inflation forecast.

Tim McMahon, Editor
Financial Trend Forecaster

Note:

As you long time watchers of the Moore Inflation Predictor can see...  we've changed the chart a bit. We made the most likely line more obvious and the projected range lighter.  We also kept all the lines red instead of having the projected line a different color than the actual line.  Hopefully, this will give you a better feel for what is in store.