As the lead article in this issue illustrates, the inflation threat largely driven in 2005 by energy price hikes has moderated, particularly the last few months of the year. Wholesale prices rose 1.1 percent in 2006, compared to 5.4 percent in 2005. But wholesale prices except food and energy – the core inflation rate – moved up 2 percent in 2006 following a 1.4 percent gain in 2005.

Distributors need to look more closely at the stats in their own sectors, as there are a lot of mixed signals. Materials for durable manufacturing increased 13 percent in 2006; prices for materials/components for construction increased 4.3 percent.

But as these pages pointed out (Adam Fein article in Nov. 10, 2006 MDM), distributors really need to watch steroid revenue growth produced …