Inflation Spikes At 26-Year High

Higher Costs For Food, Energy And Meds Push U.S. Wholesale Prices Up Sharply

(AP)  Inflation at the wholesale level soared in January, pushed higher by rising costs for food, energy and medicine.

The Labor Department said Tuesday that wholesale prices rose 1 percent last month, more than double the 0.4 percent increase that economists had been expecting.

The January surge left wholesale prices rising by 7.5 percent over the past 12 months, the fastest pace in more than 26 years, since prices had risen at a 7.5 percent pace in the 12 months ending in October 1981.

The worse-than-expected performance was certain to capture attention at the Federal Reserve, which has chosen to combat a threatened recession by aggressively cutting interest rates in the belief that weaker economic growth will keep a lid on prices.

But the combination of rising inflation and weaker growth raises the threat of "stagflation," the economic malady that plagued the U.S. through the 1970s, when a series of oil shocks left households battered by the twin problems of stagnant growth and rising inflation.

The 1 percent jump in wholesale prices followed a 0.3 percent decline in December and was the biggest one-month increase since a 2.6 percent increase in November. That gain had been driven by sharply higher energy costs.

The big jump in wholesale prices followed a report last week that consumer prices had risen by a worse-than-expected 0.4 percent, reflecting higher costs for food, energy and health care.

The wholesale report said that energy prices jumped 1.5 percent, as gasoline prices rose by 2.9 percent and the cost of home heating oil jumped by 8.5 percent.

Food prices, which have been surging because of increased demand stemming from ethanol production, rose by 1.7 percent last month, the biggest monthly increase in three years. Prices for beef, bakery products and eggs were all up sharply.

Core wholesale inflation, which excludes food and energy, posted a 0.4 percent increase, the biggest increase in 11 months. This gain was led by a 1.5 percent spike in the cost of prescription and non-prescription drugs.

The cost of book publishing was up 1.7 percent while the price of light trucks and passenger cars both rose by 0.3 percent.

Prices excluding food and energy are up 2.5 percent over the past 12 months, the fastest 12-month gain since a 2.5 percent rise in the 12 months ending in October.

[fstop100]

Record Corporate profits and record corporate executives salaries and golden parachutes could be a part of the problem. But Georgie Boy says no problem.

[gce65]

mcv57:
Yep, stag-flation is stagnation in growth coupled with inflation. It''s what we had in the 70''s I think.

[gce65]

It''s amazing that with this inflation news and housing foreclosures up 57% the stock market still continues to gain in the last few days. Yet again more proof that the markets are not related to the economy or reality in any way.

[mcv57]

President Bush will be making a major announcement soon: "There is no recession. Let me repeat: There is no recession."

Posted by incog-nito

The bushwacker is already making his announcements, his corporate establishment is calling the U.S. economy: "stag-flation"

[incog-nito]

President Bush will be making a major announcement soon: "There is no recession. Let me repeat: There is no recession."

[tylenol6]

*****Alan Greenspan is telling the Gulf states to DROP
the dollar!!!!!! Greenspan has said inflation rates in
the Gulf states which are reaching record levels, would fall significantly if oil producers dropped the dollar peg. People, if the Gulf states dropped the dollar, OUR ECONOMY WOULD COLLAPSE!!!! GREENSPAN WANTS TO TANK THE DOLLAR INTENTIONALLY AS SO THE PLAN IS SO THEY CAN BRING IN THE EURO. WAKE UP PEOPLE!!!!!! This
is all for the NEW ONE WORLD GOVERNMENT.

[inventagod]

Hmmm - Inflation thru the roof, massive foreclosures...
We are nearing the end of another Republicon cycle...

Democrats man the cleanup stations!!!

[random_radar]

The rich get richer because they understand the economic system. The poor get poorer because they believe the lies the rich tell them about inflation, credit, and banking.

If you feel compelled to complain about the rich taking advantage of you while you become poorer, you might want to open your mind and seek the truth about economics. Not that it will be easy to find since you probably can''t believe it, but if you could understand the truth, you would prosper and become rich.

[mcv57]

I am voting for Ralph Nader; it''s him or Bozo the Clown. Sad thing, but if Bozo ran for president, the other clowns would probably beat him in the General Elections.

[cyberus-2009]

*Trickle Down Economics*
A condition where the rich stand above you and whizz on your head and tell you its Golden Rain

[missingamerica]

26-year high, eh?

Ok, people:

Are you better off since the first liar told the "trickle down" lie, or not?

Better yet, do you think those "trickle down" lies will create a better or worse future for your children than you had?

lolllllll.....

[shanev137]

The recent actions of the Fed to lower interest rates Banks charge will solve this problem.


----------


hahahaha.....the FED is the one who is creating inflation. You don''t lower interest rates after inflation has already hit and the value of your currency is in the toilet....you raise them.

Hey junior, go back and take an econ101 class.

[noloyalisti]

This inflation was totally predictable when the Fed started dropping interest rates. That cheapens the currency and also causes the stock market to rise. It actually has nothing to do with real wealth or prosperity. Only getting rid of the conservative ideology of economics, famously promulgated by the 2nd worst president of all time, Reagan, will start to solve the stagflation. But it''s going to be a long haul and will likely get much worse because of the war spending.

[shanev137]

Where are all the stupid, kool-aid drinking, bush lovers to deny that there is no inflation and that the media is just lying and making this up??

[observer2020]

Actually, my vote is for: None of the Above!

[harp1963]

It''s all the Democrats fault, even though the Republicans have been in charge 20 out of the last 28 years. Keep voting Republican. The suffering of poverty will finally unite Americans.

[denn034]

The recent actions of the Fed to lower interest rates Banks charge will solve this problem.

[noloyalisti]

Bush and the neo con men crime family have learned well from the Milton Friedman crowd and the Nazis. Privatize everything and once the government is owned by big business, voila, you have fascism.

According to Friedman, wars are even good because it enables you to have chaos which enables the fascists to move in and take over economically. Who would have thought we would let this happen in America.

Actually the republiscam conervatives have gotten what they wanted. I just don''t understand how working people could support their lunacy. We need to hold conservatives responsible for their votes and let everyone know what we think of them. Constantly.

[ianlou]

OK, per our NeoCon friends, this is the history leading up to today''s economy:
Bill Clinton enjoyed the delayed results of the economic policies of George Sr. George Jr. is suffering from the delayed mistakes of Bill Clinton.

Prediction: Any turn around in the current disastrous economy that takes place when the Dems get Washington back will be attributed to the delayed results of the economic policies of George Jr.
And who says there isn''t a method to madness.

[kennergirl]

Oh, and what I forgot to say the last time was this...

Instead of sending millions/billions to everywhere else in the world (including Iraq) what about taking care of home first? We as United States citizens deserve better than what we have. A country like this one should have the greatest schools, the greatest healthcare, the least amount of poverty. We don''t and we are a long way from even coming close to being that way too. I think everybody would agree with me on this because I am sick about hearing how much money is going everywhere yet there is so much suffering going on right here.