Lord Keynes may be the most cited economist few people have actually read, but a few of his famous quips, such as “In the long run, we are all dead,” are justifiably famous. Without being unduly morbid, I try to keep in mind that even passing phenomena (such as tornados, on the one hand, and great vacations, on the other) are important while they’re happening. The same applies to economic matters, such as inflation. I tend to agree with Fed Chairman Bernanke’s view, that although the current rise in U.S. inflation is “transitory,” we shouldn’t ignore the implications of the current global pattern of rising prices.

Recent reports on U.S. inflation have been surprisingly high at both the wholesale and retail levels—not what we had when leisure suits were in vogue, to be sure—but at 3.6% for the past 12 months, consumer price inflation is higher than you’d expect with over 9% unemployment and weak economic growth. Even more worrisome are reports of inflation running at 5.5% in China (where food prices rose 11.7%), 6.5% in Brazil, and even 4.5% in the U.K.

I say “more worrisome” for two reasons. First, some of those price increases will ultimately find their way into the U.S. consumer’s market basket. As a result of foreign inflation and the U.S. dollar’s depreciation, prices on imported goods have increased 12.5% over the past year. Even if you exclude petroleum, prices of imports rose 4.5%. With U.S. wages increasing less than 2% over the same period, purchasing power for many American households has eroded. We’ve gotten used to cheap imported goods, especially from China, to help sustain our standard of living. We may have to rethink that assumption.

I also worry because rising prices are having a disruptive effect on the emerging economies themselves, as policymakers try to sustain growth while lowering inflationary pressures. These economies have led the rest of us out of our post-crisis recessions, and they are dependent on continued rapid growth to raise living standards for their still vastly impoverished populations. Note the recent civil unrest in China involving rural migrants.

Although we’re concerned about what will happen at the end of QE2 and how to stop spending more than we’re willing to pay for, we also have to keep an eye on how these global price changes may affect our own purchasing power. Personal consumption habits and investment portfolios may need to be adjusted as a result. These are things we should be thinking about now, not tomorrow. We’d better not be waiting for the long run.

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Investing in foreign securities entails special risks (such as currency fluctuations and political uncertainties) and may have higher expenses and volatility. These risks may be enhanced when investing in emerging markets.

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