WASHINGTON, Aug. 14, 2008
Consumer Prices Twice As High As Expected
Fed Faces Tough Decision On Interest Rates As Inflation Posts Biggest 12-Month Gain Since 1991
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(AP/CBS)
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Eye On The Economy
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The Labor Department reported Thursday that consumer prices rose by 0.8 percent last month, twice the 0.4 percent gain that economists had been expecting.
It marked the third straight month of oversized inflation increases following jumps of 0.6 percent in May and 1.1 percent in June. And it leaves inflation rising by 5.6 percent over the past year, the biggest 12-month gain since January 1991.
Core inflation, which excludes volatile food and energy costs, rose 0.3 percent in July, slightly higher than the 0.2 percent increase that economists had expected. For the past 12 months, core inflation has risen by 2.5 percent, the highest 12-month change since February.
The inflation surge presents a major problem for the Federal Reserve: Will inflation force it to start raising interest rates even as the economy struggles to avoid a recession?
The big rise in inflation left consumers even more squeezed. The Labor Department said that average weekly earnings, after adjusting for inflation, fell by 3.1 percent in July compared to a year ago, the biggest year-over-year decline since November 1990.
The Labor Department also reported that the number of newly laid off workers filing for unemployment benefits fell by 10,000 last week to 450,000. The decline was less than expected and showed the labor market remains under severe stress from the weak economy. The four-week average for claims rose to the highest level in six years.
On Wall Street, stock futures took a tumble after the report on worries about inflation.
The 0.8 percent rise in consumer prices reflected big increases for energy and food, a pattern that has been happening for months.
Energy prices jumped by 4 percent last month, driven upward by a 4.1 percent rise in gasoline prices. In July prices at the pump were 37.9 percent above where they were a year ago.
There could be some relief on the way, however, as gasoline prices, after hitting a record at $4.11 per gallon in mid-July, have been falling in recent weeks. They now average nationwide around $3.79 per gallon, according to the survey by auto club AAA and the Oil Price Information Service.
Crude oil prices are also down about $30 per barrel from a peak in early July and analysts are hoping that this decline will help relieve some of the pressures on energy costs.
Food costs shot up by 0.9 percent in July, reflecting higher costs for a wide variety of food products. Over the past 12 months, food prices have risen by 6 percent, reflecting surging commodity prices. The Agriculture Department reported this week that this year's corn and soybean harvests will be among the largest in history, though, easing fears that had been fueled after heavy flooding in the Midwest in June.
The core inflation figure was driven higher by a big 1.2 percent jump in clothing costs, the biggest increase in this area since August 1998. Airline ticket prices, which have been surging because of higher fuel costs, jumped another 1.3 percent in July.
© MMVIII The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.
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See all 54 CommentsReally, I hadn''t noticed. (sarcasam!!!!!)
Like his father back in 1991, the Great Emperor Bush II plans on either ignoring the whole thing, or denying that there is any inflation, just a "minor price adjustment" that only the wealthy can afford!!!!
No one expects him to ever say that it is just plain, old-fashioned corporate GREEEEEED behind all this!
Besides, the Great Emperor Bush II wants the neocon Fascist Nazi Republicans to hold on to the "throne" in the White House for the next 4 years, so we can have "More of the Same, With Bagdad John McBush McCain!!!"!!!
SIG HEIL, BUSH!!!!!
sig heil, "MENTAL RECESSION WHINERS", "SURRRRGE" McCain!!!!
Does that mean I am paying half as much as I should be for goods, or four times as much? Im so confused!
Posted by DaVicar2 at 10:45 AM : Aug 14, 2008
You are not alone. CBS needs to fire their title editor. According to the title we are paying twice as much as expected. Except for gasoline I don''t think that is necessarily true.
Or maybe thats the whole point?
sig heil, "MENTAL RECESSION WHINERS", "SURRRRGE" McCain!!!!
Posted by walt1944 at 11:27 AM : Aug 14, 2008
I''m not sure but I think I sense a little hostility toward the BUSH family in your posting.
Posted by GOP_forever at 10:56 AM : Aug 14, 2008
Uh Huh! Good luck selling that swamp there swastika breath!! Sieg Heil McSlime
Posted by DaVicar2 at 11:35 AM : Aug 14, 2008
YOU MUST try to pick up some reading skills there Sparky. It IS everyones debt CREATED by the Republican''s. LOOK at the words posted. (We)got to pay off that Republican Debt!! Pretty Clear to me!! SIEG HEIL McSLIME
Or maybe thats the whole point?
Posted by slim1h2o at 12:12 PM : Aug 14, 2008
So YOU think people who try to predict where Fascist Economic Policies will take us are at fault?? The FASCIST who took a Balanced Budget and Surplus and turned it into RECORD Debt, took all the Regulations OFF the Lending Banks AND started a War that never had to be aren''t just a wee bit responsible?? ROFLMAO Sieg Heil McSlime
Posted by redbds at 12:15 PM : Aug 14, 2008
No!! I think he''s saying what the VAST majority of the citizens of the REST of the world are... Bush and the Republican Party are FASCIST!! Where have you been?? ROFLMAO Sieg Heil McSlime
Posted by MCVet-1 at 12:40 PM : Aug 14, 2008
Uhhh,,Well yes!(as he says sarcasticly)
That was the whole point I was eluding to. That there is a war going on AGAINST the middle class. And if the economists couldn''t predict it, which they could, and probably did, Bush simply payed no mind to it. Because, This is exactly what he wanted. And don''t forget, economists work for the feds, not us.
Seig Hill yourself!!
What moron writes these headlines?
The inflaion RATE, not consumer PRICES, was twice as high as expected.
Republicon rape continues...
John "I don''t know as much about the economy as I should" McCain is almost done with Alan Greenspan''s book!
He''ll save the day!
I''m really getting tired of the media agencies manipulating the people for the sake of the political elite.
I''ll spell it out for you. Burnanke did the housing bail out bill last month so he could turn the value of the dollar around and pull the reins in on inflation. This will work by moving these people out of ARM''s and into Fixed rate mortgages. Once, these people are moved over, he can start to increase the federal interest rate. The comodites market (oil, gold, silver, platinum, etc) have fallen off a cliff since this bill and the speculator bill were passed mid July and the dollar has been gaining significant ground against foreign major currencies (British pound, Euro, Austrailian Dollar, Canadian Dollar, etc).
The markets have already moved in preparation for this. Go to this site
http://fx.sauder.ubc.ca/plot.html
and look up everything I''ve listed here, and see where the elite have already moved their money and the comodities market that is being shorted.
Was just getting ready to say the same. Maybe some remedial math for headline editors?
Posted by SistaTee
That''s when they were driving the dollar down, they''ve now turned it around so they can start increasing the value of the dollar.
Hint: You can''t make money on something by buying high and oil is high. You have to make things go up and down so you can buy them low and sell them high. Take GM for example, an obvious buy, considering they''ve done and said everything they possible could to drive the price of that stock down. If you know anything about GM, then you''ll know they have significant money in upcoming future technologies that they are going to be dumping on the market in the later half of 2010. This is the opposite of pump and dump. You drive the price down so the elite can move their money in cheap and enjoy the ride back up. Don''t forget to short the oil and commodities market, still going down due to the dollar. The dollar is moving slowly unlike the commodities market, though, in case you missed it this last month.
The fed is not printing more money, thats not how it works.
Interest rates will always go up to curb inflation, thats the feds job, that''s what they are there for.
And as far as the headline goes...it''s referring to the consumer price index, not actual consumer prices...c''mon people, do you have a clue or are you just ranting to see if your keyboard works?
Um, last I checked the Fed Chairman Greenspan dropped the interest rate to 1%, not the banks or the people taking the loans. The people, mostly uneducated and easily hoodwinked city folk, fell easily into the predatory lending practices by the banks (making money hand over fist) that went on FOR YEARS, with no regulations and no interference by the GOP congress, and of course, they too wanted to be a part of the house flipping market, rolling in the $$$$. Then, big surprise, there is a housing downturn when the rates started to move, shaking the people close to the barely making it line, out of their house. The Fed steps in again and holds rates down for a while to keep things steady for the economy, and then pushes through the housing bail out. Now the rates will start going up fast, probably around Christmas to Spring. The whole thing was planned and the markets manipulated right from the upper oligarchy.
Oh yeah, and the Fed, they printed money and pumped it into the economy. Billions upon billions worth of it as recently as this past spring.
In fact, I''m quite suprised inflation isn''t higher than they are reporting...
Posted by jtdev1
Oh, it is. They just omit things like food and energy and whatever else they need to so to keep the numbers looking the way they want to in reports for the media to print to the masses.
Interest rates at 1%? Really? I own three houses and would love a piece of that action, can you show me where I can get a mortgage at 1%? Any proof of the "billions upon billions"? I have my doubts.
The sub-prime mortgage "crisis" hurt the economy. Irresponsible lenders and borrowers. Now the fed is going to bail them out and who pays for it? I do. The guy that DIDN''T default on a mortgage. The guy that DIDN''T have his house forclosed on. Once again the responsible people in society get to spoon feed the *** leeches.
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Posted by omega39 at 03:33 PM : Aug 14, 2008--
drilling has nothing to do with INFLATION !!!! (screaming loudly)
YOU REPUBLICAN MORON!
So how can it fix the problem of hyper-inflationary price?
My Goodness, Republicans know absolutely nothing about economics and printing all of this worthless money for some mis-adventure in Iraq.
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Posted by omega39 at 03:33 PM : Aug 14, 2008--
drilling has nothing to do with INFLATION !!!! (screaming loudly)
YOU REPUBLICAN MORON!
So how can it fix the problem of hyper-inflationary prices?
My Goodness, Republicans know absolutely nothing about economics yet they claim to only vote for politicians with an MBA.
it''s printing all of this worthless money for some mis-adventure in Iraq caused all of this inflation.
And anti-war critics warned you clowns this would happened; that the war wouldn''t "pay for itself" but the "middle class" would pay for it through hyper-inflation.
You can count on a Bu$h to make inflation shoot up.
Vote Obama.
If you make more than $250,000/year, you will pay more in taxes (as you should). If you make less than $250,000 you will pay less.
Posted by bobbyduck1 at 10:53 AM
Don''t count on it. The ignorance and bigotry of the right wing racist elitists is absolutely astounding.
Republican''s your butts are mud in November. We have had enough and won''t take any more. You best move to Dubai with Dubya and crew.
Posted by laborsvoice at 02:55 AM : Aug 15, 2008
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You''re really a pretty nice guy! Most people I know would start with a good caning, waterboarding, a beating, tar ''n feathering, and THEN things would get ugly!
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Posted by mjvw2 at 08:01 AM : Aug 15, 2008--
I concede the point that higher taxes would cause you to lay off people but your recession/depression will get worse because of "demand" evaporating. Thus eventually you will go out of business. It''s a vicious cycle.
But there''s no comparison of someone who doesn''t make enough to buy groceries on a salary eaten up by inflation and just holding out for welfare where you still pay the taxes for. That''s the price you pay for this 100 year Iraq war nonsense!
Either you pay through inflation or you pay taxes when it comes to backing up the fiat currency known as the "dollar". You have no choice except to go back to the "gold standard".
However the real solution is to "end the war in Iraq NOW".
This jackazz has ruined our economy, guess he deserves a medal from the next repervican president.
[Posted by mjvw2 at 08:01 AM : Aug 15, 2008]
so you have ten people working for you that could be done by seven? then why do you have ten?
you won''t be able to extract much more from the remaining seven if they are fully utilized. you''ll have less output ... which will produce less income ... which will affect you.
and if you do manage to drive them harder for the same wage ... they''ll be distant memories as soon as the market opens up and they can find a job elsewhere where they''re not overworked.
if your business requires no continuity in your workforce ... or has ''no-skill'' workers doing the tasks ... you''re stategy might work.
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