EU-Digest: The era of imported disinflation may have come to an end for the U.S

Special report on the deteriorating US economic situation

The era of imported disinflation may have come to an end for the U.S

The Wall Street Journal reported that not only the global rise in food prices is now even catching up with continental Europe, adding to mounting inflation worries and forcing changes to European Union agriculture policy. Rising global food demand, freakish weather and the trend to reroute crops for biofuels are pushing up food-commodity prices globally. Standard & Poor's GSCI Excess Return Index, which measures the price movements of eight agriculture commodities -- including wheat, sugar and corn -- is up 10% in the past year.

U.S. import prices swelled for a fifth-straight month in July on higher energy prices and another record increase in the prices of products from China, suggesting the U.S. can no longer count on cheap overseas goods to offset domestic price pressures. The data should keep US Federal Reserve policy makers on edge about the risk that high oil and commodity prices, a weak dollar and robust global economic growth will boost inflation in the U.S.