According to the Food and Agriculture Organization (FAO), world food prices rose a record 3.4% in January. At this break neck speed, we will see much civil unrest.
We need deflation, and fast, to keep the net purchasing power intact for 2011. For example, if prices rise 12% in 2011, then deflation hits, we'll need quite a bit of price dropping to ensure fixed income can keep up.
100 * 12% = 112.
112 * -10.7% = 100
So to keep up with inflation, need to keep under a 4% difference.
I actually have no clue how this plays out, hence my call to hedge resources with safer investments.