As discussed frequently in this column, for most of the developed world the primary threat in recent years has been deflation – and in Japan that has been a reality for nigh on two decades. Indeed, one of the main justifications put forward by central bankers for the pursuit of unorthodox monetary policy, in the form of QE (quantitative easing), has been the very real threat of deflation.

Many economic analysts believed that the massive amount of liquidity pumped into the US, Chinese, Japanese and hence global economies via these policies would – nay, must – generate inflation. Yet after more than five years of sporadic but cumulatively massive pumping, inflation remains low to very low. The latest Japanese effort does seem to have succeeded in pushing the country from deflation to inflation, but that has been achieved via a devaluation that has made imports far more expensive, without generating an inflationary dynamic in the domestic economy.

Many people, in numerous countries, find it impossible to reconcile the official statistics with their own daily experience.

They buy gasoline, food and other staples, electricity, gas and water, and, above all, they pay rent or buy homes, and the prices of all of these items seem to have risen – often considerably. They, along with some economists, therefore dismiss the official data as propaganda designed to hoodwink the masses and keep them docile. In many developing economies, this has failed to work, with the so-called Arab Spring only the most telling example of revolutions sparked by sharp rises in the cost of staple products, usually bread and oil.

However, in developed economies, the simple fact is that for most people, these staple products and utilities are only a small share of their “consumption basket.” Indeed, that fact is the most obvious evidence that these economies are “developed.” Their citizens spend most of their money on services and on manufactured goods whose prices have gone down, in absolute terms or relatively (the same amount of money now buys far more computing power or a much more sophisticated TV than it did a few years ago).

This discussion between theoretical economists and statisticians on the one hand, and “real people” on the other, could have rumbled on forever, with neither side convincing the other. The financial markets – “Wall Street” – work on the basis of the official data, while ordinary people – “Main Street” – relate to what they find in gas stations and supermarket shelves, perhaps conveniently forgetting the plummeting cost of communications, entertainment, etc.

However, Mother Nature has intervened.

Coffee (prices) jumped the most in a decade, soybeans reached the highest since December and sugar rallied as drought scorches fields in Brazil, the world’s biggest exporter of the crops.

That is the lead of a Bloomberg news item from Wednesday of this week. Many people – probably including you, dear reader – are blissfully unaware that there is a terrible drought in Brazil. That’s in addition to the really terrible drought in California – the place that grows a large proportion of the fruit consumed by Americans. But Brazil is perhaps even more important in a global context because it exports so much of what it grows.

Meanwhile, back in the US of A, the prices of fuel have been soaring because of the extraordinarily harsh winter.

Natural-gas prices have jumped, as you would expect, but the fire has spread to oil, too, with prices in the US back above $100 per barrel and in Europe over $110. Consumers are already being hit by the next stage – the knock-on impact from fuel prices, in the form of the inevitable rise in electricity prices, because the former is the raw material for producing the latter. Electricity is an input in everything else – and so on. You get the idea.

In other words, for the first time in some years we have the prospect of a surge in inflation that will impact virtually everything and everybody. The good news is that it probably won’t trigger a sustainable inflationary cycle. The bad news is also that it won’t trigger a sustainable inflationary cycle.

The explanation of that apparent contradiction is this: For inflation to become entrenched and engender a “cycle,” it has to impact not just the markets for goods and services, but also for labor. That means that wages have to rise. However, with so much unemployment, underemployment, technology-based replacement of workers and consequent lack of final demand, wages will not rise. That is what is destroying Japanese premier Shinto Abe’s attempt to kickstart the Japanese economy – employers are refusing to raise wages, because they don’t need to.

When things cost more but wages remaining much the same, people adjust their consumption patterns: They buy what they need and, finding themselves out of money, cut back on other things. That is a recipe for recession – in this case an inflationary recession. That’s not a pleasant prospect, but it helps to be aware of what is on the way – and to stock up on coffee, etc., before their retail prices soar too.

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