Supply and demand, in short. It seems like Panasonic has been hit especially hard by the Japan earthquake and is unable to replenish stock. Diminishing supplies in turn result in escalating prices. This applies not only to this particular lens, but also to nearly all of Panasonic's Micro Four Thirds lineup.
This is not the time to shop for these items lest one encourages price-gouging.
These lenses were selling for well under $300 for months, vs: the @$350 retail price. I got mine for $229 just before the price spike as an open box demo from Adorama. Just try to ride it out for a few months and watch carefully.
If you can't wait, Adorama still has them in stock at the $349.95 retail with free shipping.
Thank you all for the replies. I WAS ready to buy this and could never believe it has gone up so much ! I also thought it might have something to do with the earthquakes. I bought the 20mm f1.7 pancake one for $340 months go, and have been saving up for this one, but then I guess I will have to hold for a possible price drop hopefully in a not so distant future, or not. Anyway, at the current price, I just cannot afford it.