Federal Reserve Chairman Ben S. Bernanke tried to calm American consumers last week by saying surging commodity prices are "unlikely to induce significant" inflation in labor costs, but that ignored the fact that food and fuel represent one-fifth of the Consumer Price Index.
Meanwhile, Procter & Gamble Co. and Kimberly-Clark Corp., America's two largest makers of diapers, just announced they will pass on increasing pulp and paper prices to consumers. And United Technologies Corp., the world's largest maker of air conditioners, increased prices to offset higher costs for copper.
Investors like Dan Weiskopf, of Global ETF Strategies in New York City, might not have a particular forecast on inflation beyond its moving higher, but Weiskopf, for one, remains "concerned that the magnitude of the change will ultimately spook investors."
He noted that assets besides TIPS also were highly correlated with inflation, especially commodities, which tend to increase in price as investors seek havens in hard assets.
Some commodities ETFs - such as the SPDR Gold Trust (symbol: GLD), with $56 billion, and iShares Silver Trust (SLV), with $13.5 billion - are well-known hedges against inflation. Investors often put money in precious metals as paper currencies such as the U.S. dollar fall in value.
Other inflation-fighter ETFs are less well-known: ETFs Physical Precious Metals Basket Trust is an exchange-traded fund that aims to track the prices of gold, silver, platinum, and palladium bullion (symbol: GLTR).
