The economy will grow 3.1% in 2011 and 3.15% in 2012, according to the median forecasts in Bloomberg surveys. The median growth forecasts in October were for 2.4% expansion in 2011 and 3% in 2012.
Commodities, Fed
Inflation may accelerate after commodities including corn, cotton and crude oil rose 26% since August as measured by the Thomson Reuters/Jeffries CRB Index. That's when Fed Chairman Ben S. Bernanke said he was considering resuming purchases of bonds to inject cash into the financial system to help bolster the flagging economic recovery.
Prices have become a larger concern in emerging markets, with central banks in China, Brazil and India raising borrowing to keep inflation from accelerating. Policy makers in Russia are considering their first rate increase since 2008 after consumer prices rose at an annualized 8.8% pace in December, up from 5.5% in July.
Global food costs jumped 25% last year to a record in December, according to the United Nations. In the U.S., the largest exporter, retail food rose 1.5% last year and will gain as little as 2% in 2011, the Department of Agriculture estimates.
Seeking 'Proof'
U.S. consumers haven't been squeezed so far, though grocers from Jacksonville, Florida-based Winn-Dixie Stores Inc. to SuperValu Inc. in Eden Prairie, Minnesota, have said they plan price increases. Commodities will keep rising, according to a Bloomberg survey of more than 100 analysts and traders.
The faster inflation that TIPS breakeven rates are forecasting may reflect their correlation with commodities, stocks and high-yield bonds rather than higher prices, said George Goncalves, head of interest-rate strategy at primary dealer Nomura Holdings Inc. in New York.
"I need to see the proof in the pudding," Goncalves said. "You know inflation is happening if stocks go down and TIPS stay where they are."
The last time that happened was in the period from October 2007 through July 2008, when breakevens rose to 2.6 percentage points from 2.3 percentage points while the Standard & Poor's 500 Index plunged 16% as the Fed cut borrowing costs to counter the housing crisis.