A Wave of Inflation?

The Wall Street Journal today (June 13, 2008) says that manufacture of heavy and bulky items is returning to the US. The reason is skyrocketing transportation costs. Shipping cost from China to the US has quadrupled since 2000 for a standard shipping container. The cost passed on to products has risen from 3% to 9%. If inflation is confined to fuel prices then this is good news for the job market in the US. However in the 1970’s inflation was not evenly distributed. If this is the case then transportation cost will eventually return to the 3% level. This means a major spike in price. This seems to be confirmed with overseas cost of everything from Starbucks coffee to game boxes. The cost to buy the same product in Europe or Asia is significantly higher than the US. This is blamed on the weak dollar. But eventually overseas prices must come down or prices here go up. Otherwise it will become profitable to take imported goods and export them.