Archive for Wednesday, August 20, 2008

Inflation increase puts Fed on the spot

August 20, 2008


— Despite declining energy costs, wholesale prices soared in July, giving the economy the worst 12 months of inflation in almost three decades and increasing pressure on the Federal Reserve to raise interest rates.

The producer price index rose 1.2 percent in July alone, about double the increase expected by economists, the Labor Department said Tuesday. Excluding food and fuel, the index surged 0.7 percent, also more than expected.

The overall index last month was up 9.8 percent from a year earlier, the sharpest rise since 1980-81.

Some analysts say inflation will moderate as lower fuel costs work their way through the economy, but Tuesday's report still generated concern.


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