Food, Oil Prices Push Inflation to 17 Year High
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Steve Verdon | Thursday, August 14, 2008 |
The prices increases for food and oil have pushed inflation to its highest levels since 1991.
The cost of living in the US surged at twice the rate expected last month to the fastest annual level in 17 and a half years, official data showed today, due to spiralling food and oil prices.
The data adds to the gloomy economic news in the US coming from the slump in the housing market, falling growth and risk of a recession.
The Labour Department said that the consumer prices index of inflation, the key measure of inflation, rose at 0.8% in July, after a 1.1% jump in June. This was double Wall Street expectations.
Right now the big fear is that a shock will push commodity prices back up thus leading to more inflation and force the Federal Reserve to increase the interest rate to address the issue of inflation. This would be bad news for an already weak economy.
About the Author: Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research.
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What about the tough question, Steve: is this inflation or differential price increases? I think rather the latter but the public tends not to distinguish between the two.
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