Bill Simon (Getty Images photo)

The one retailer prepared to cut costs to the bone to save money for consumers now warns that prices will rise very soon — no matter what. Retailers have generally managed to hold prices low despite rising raw materials costs. They had little choice: High U.S. unemployment and lack of credit has kept people out of stores. That’s over, says Wal-Mart CEO Bill Simon. Prices will now rise across the board for all retailers, Wal-Mart included. He called the situation “serious.”"We're seeing cost increases starting to come through at a pretty rapid rate," Simon told USA Today in a meeting with the newspaper’s editorial board.Consumer prices rose by 0.5 percent in February, while core inflation — minus food and energy — was up 0.2 percent. Consumer confidence fell by a sharp 8.6 points in March, reports The Conference Board, after climbing in February, in part on expectations of coming inflation.Wal-Mart will try to keep things under control, Simon says. "We're in a position to use scale to hold prices lower longer ... even in an inflationary environment," he told USA Today. "We will have the lowest prices in the market."That might be, but the prices for most goods could rise at nearly all stores, so Wal-Mart’s efforts would end up relative to an across-the-board increase in the cost of living.Driving the inflation debate is a difference among monetary policymakers regarding inflation. That discussion centers on the ideas of “headline” versus “core” inflation.“Headline” inflation represents the actual cost of a basket of goods and services the average American buys.The “core” number strips out energy and food prices, which are more volatile — often hitting higher highs and lower lows — than the rest of the items involved in calculating the real cost of living.Federal Reserve Chairman Ben Bernanke has repeatedly stated that his focus will be on the second number, core, since in his view the Fed’s role is to manage long-term trends in inflation, not monthly or quarterly spikes in food or energy.The Fed is well down the path of its latest, controversial $600 billion program of easing monetary conditions by purchasing U.S. Treasury bonds. Markets fear that some of the Fed cash printed up to buy those bonds could end up in economy instead, drastically weakening the dollar.Since commodities like food and oil are priced in dollars, that has led to at least some short-term speculation that the Fed will lose control of inflation entirely.Accordingly, safe havens such as gold have touched new highs, recently trading at $1,459 an ounce. Oil is above $106 a barrel in the United States, and nearly $117 in European trading.In turn, rising food prices have sparked riots around the world, an outcome Bernanke flatly dismisses as the Fed’s responsibility. He has said that foreign central banks can control their own, local inflation using their own monetary policy, although it’s clear that doing so would endanger exports for those countries and slow their growth.A dissenting member of the Federal Reserve now scheduled to retire from the bank is repeating his long-held view that the Fed’s easing policy is directly dangerous to Americans."If current policy remains in place, we almost certainly will stimulate the growth of asset values and inflation," Federal Reserve Bank of Kansas City President Thomas Hoenig said Wednesday in a speech at the London School of Economics, reported Dow Jones Newswires."There are signs that the world is building new economic imbalances and inflationary impulses," Hoenig said. "The longer policy remains as it is, the greater the likelihood these pressures will build and ultimately undermine world growth."