To those who think that buying food in the corner deli is becoming a luxury, we have five words: you ain't seen nuthin' yet. U.S. consumers face "serious" inflation in the months ahead for clothing, food and other products, the head of Wal-Mart's U.S. operations warned Wednesday talking to USA Today. And if Wal-Mart which is at the very bottom of commoditized consumer retail, and at the very peak of avoiding reexporting of US inflation by way of China is concerned, it may be time to panic, or at least cancel those plane tickets to Zimbabwe, which is soon coming to us.

The world's largest retailer is working with suppliers to minimize the effect of cost increases and believes its low-cost business model will position it better than its competitors.



Still, inflation is "going to be serious," Wal-Mart U.S. CEO Bill Simon said during a meeting with USA TODAY's editorial board. "We're seeing cost increases starting to come through at a pretty rapid rate."



Along with steep increases in raw material costs, John Long, a retail strategist at Kurt Salmon, says labor costs in China and fuel costs for transportation are weighing heavily on retailers. He predicts prices will start increasing at all retailers in June.



"Every single retailer has and is paying more for the items they sell, and retailers will be passing some of these costs along," Long says. "Except for fuel costs, U.S. consumers haven't seen much in the way of inflation for almost a decade, so a broad-based increase in prices will be unprecedented in recent memory."



Consumer prices — or the consumer price index — rose 0.5% in February, the most since mid-2009, largely because of surging food and gasoline prices. Core inflation, which excludes volatile food and energy costs, rose a more modest 0.2%, though that still exceeded estimates.

Add to this the shock that was today's grains report, and the summer is about to seem like straight out of Harare.

Farmers will struggle to replenish rapidly shrinking U.S. grain stocks this year, despite plans to sow the most land to corn since World War Two and near-record acreage to soybeans, two U.S. government reports showed on Thursday.



Chicago corn prices surged their daily limit, while soybeans and wheat jumped more than 3 percent as traders looked past higher-than-expected figures in the Department of Agriculture's annual planting survey to focus on inventories, which fell much more than forecast.



The report underscored the fact that U.S. farmers are now reaching the limits of arable land in the world's biggest crop exporter, with increased corn sowing coming at the expense of soybeans and cotton. The spring wheat crop, while among the biggest in decades, could yet shrink.

Here is why some grain traders made millions today:

This year's spring planting season in the world's biggest crop exporter is being watched more closely than ever by countries fearful that further increases in already record-high food prices could stoke unrest.



An analysis of the data based on the acreage estimates and historical yields suggested that the corn harvest could be the largest ever and soybeans the third-largest.



But that would still leave corn inventories at the end of the 2011/12 season at the equivalent of just three-weeks' supply, and soybeans would dwindle to scarcely 10 days' cover. Analysts say prices must rise high enough to reduce demand.



"This turns us back to having to ration the corn," said Charlie Sernatinger, analyst at ABN Amro.



May corn jumped 30 cents to $6.93-1/4 a bushel, hitting the daily exchange limit; options trading suggested further gains to more than $7.15, near the post-2008 peak of $7.35 hit on March 4. Soybeans jumped to over $14.18 and wheat recouped part of its 20 percent slump since mid-February.

As we expected over the weekend, the commodity correction is over, and absent another nuclear explosion (which still will be priced in within minutes) commodities have only one way to from here.