laissez-faire what me worry, bail out the rich economy is producing
raging inflation,
Wholesale Prices Soar 1.1 Percent in March, Driven by Big Increases in
Food and Energy, but the core rate is fine
http://biz.yahoo.com/ap/080415/economy.html
Wholesale Prices Soar in March
Tuesday April 15, 9:56 am ET
By Martin Crutsinger, AP Economics Writer
Wholesale Prices Soar 1.1 Percent in March, Driven by Big Increases in
Food and Energy
WA****NGTON (AP) -- Inflation at the wholesale level soared in March at
nearly triple the rate that had been expected as the costs of energy
and food both climbed rapidly.
The Labor Department re****ted Tuesday that wholesale prices rose by
1.1 percent last month, the largest increase since a 2.6 percent rise
last November, which had been the biggest one-month jump in 33 years.
Analysts had been expecting a much more moderate 0.4 percent rise in
wholesale prices for the month.
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Core inflation, which excludes energy and food, was better behaved
last month, rising by just 0.2 percent, down from a worrisome 0.5
percent rise in February.
For the past 12 months, wholesale prices are up by 6.9 percent and
core inflation is up by 2.7 percent, the biggest year-over-year
increase in nearly two years.
The inflation pressures are occurring at a time when the overall
economy is slowing and many analysts believe may have toppled into a
recession. That raises concerns that the country could be facing
another bout of stagflation, the malady that last occurred in the
1970s when economic growth stagnated but inflation kept rising.
Such a development would put the Federal Reserve in a bind. The
central bank has been cutting interest rates in an effort to combat
the current slowdown. However, if inflation pressures keep rising, it
might be forced to stop cutting interest rates for fear that it would
make inflation worse.
For March, energy prices jumped 2.9 percent, the biggest increase
since November. The price of gasoline was up 1.3 percent while natural
gas rose by 4.2 percent. Home heating oil shot up by 13.1 percent and
diesel fuel, used to power the nation's trucking fleet, increased by
15.3 percent.
Analysts believe the economy will be hit with more energy pressures in
coming months, reflecting the fact that crude oil costs are remaining
at record levels above $111 per barrel.
Food costs rose by 1.2 percent in March, reflecting big increases in
the price of vegetables, rice, and beef.
Outside of food and energy, the price of soap and detergents jumped 2
percent, the biggest gain in more than two years, while pet food
increased by 1.3 percent.
However, the price of new cars dropped by 0.2 percent and the cost of
light trucks was down 0.3 percent, indicating the struggles that
automakers face as a weak economy dampens demand.
The government will re****t on consumer prices on Wednesday with the
expectation that they rose by 0.3 percent in March.
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