A lot of the pundits who are now proclaiming victory for inflation in light of these one-time, fluke numbers, which can be attributed to hurricanes Katrina and Rita, are the same pundits who kept reminding us how far the PPI and CPI numbers were off when they were "adjusted for seasonality" whenever they showed low inflation or even deflation.

So I say, let's go to the source.

Forget the government numbers, let's look at what people are actually willing to pay for the raw materials that make up the building blocks of the economy, starting with the various soft commodities such as wheat, soybean and corn. We don't need to look at government-produced numbers. Let's look at what traders, who are affected on a daily basis by supply and demand, are willing to pay for these commodities.

• Wheat, at $3.28, is significantly lower than its 10-year high of $7.50 reached in 1996. The chart, courtesy of futuresource.com, can be found here. Wheat is even significantly lower than its five-year high of around $4.25, which was reached in 2002.

• Soybean futures were as high as $10.50 as recently as early 2004, and they're now at $5.84. Check out this 15-year chart.

• At about $0.1169, sugar is a lot higher than it was just two years ago, but it is also a lot lower than its 1990s high. Inflation? Deflation? Here's the chart..

And that's not all. Oats are at $1.64, down from a high of $2.80. Hogs are at $0.60, down from a high of $0.85. Got milk? In 1995, it was at $1.42. Today, it's at $1.42. And it goes on. Yes, live cattle is up to $0.85 from $0.60, but frankly, steak is getting better.

What about lumber? Hasn't there been a huge increase in demand for lumber thanks to the "bubble" in housing? One year ago, lumber was at $460, and it's now at $283. The 10-year high of around $480 was reached in 1996.

The Impact of Lower Soft Commodity Prices