The middle / working class are taking it on the chin and up the arse by the FED and the government.
Think corporate welfare and Wall Street / bank bailouts don't affect Americans.... think again. We are getting hit by this hidden tax on our pocketbook. The FED's continuation of printing money to bailout all their corporate buddies is devaluing the dollar... as it has been for several years now. The cost of energy has been another log on the fires of inflation...
QUOTE
International Herald Tribune
U.S. inflation hits highest annual rate since 1991
By Michael M. Grynbaum
Thursday, August 14, 2008
Inflation reached a 17-year high last month, fueled by high gasoline and food prices, all but assuring that the Federal Reserve will keep interest rates on hold for the time being.
Consumer prices were 5.6 percent higher last month than they were in July 2007, a brisker pace than economists had expected, the Labor Department said on Thursday.
That was the sharpest annual increase since January 1991, as Americans paid more for clothing, food, transportation and recreational products. On Wall Street, stock index futures fell sharply after the data was released.
The overall Consumer Price Index, considered the benchmark gauge of domestic inflation, rose 0.8 percent in July. Economists had forecast a rise of half that rate. In June, prices rose 1.1 percent, the second highest monthly pace in 26 years.
The CPI surveys prices of a basket of common consumer goods, measuring everything from toothpaste and prescription drugs to airline fares and restaurant menus.
Because food and energy prices can be highly volatile from month to month, the Labor Department also calculates a so-called "core" price index, which strips out those costs. In July, core CPI rose 0.3 percent, reaching a 2.5 percent annual rate.
That is higher than the Federal Reserve and other economic policy makers would prefer. Central bankers use core CPI to see whether price increases are becoming entrenched in the broader economy; Fed officials are said to prefer a ceiling of 2 percent annual increases.
The Fed has signaled repeatedly that it has no plans to lower interest rates, given the threat inflation poses to the economy. Lowering rates could stimulate more economic activity, but such a move would risk inflating prices further. Thursday's CPI report cements that view, and suggests that a rate increase could come sooner rather than later.
Still, central bankers face a difficult scenario. The American economy continues to deteriorate: consumer spending is bad and likely to get worse; home prices continue to fall; and Wall Street has been unable to shake a credit crisis that keeps hurting big institutions. Stock prices are down too, further eroding household wealth.
The CPI provided further evidence about the price pressures facing Americans this summer. Energy prices were up 4 percent in July; transportation costs increased 1.7 percent on a sharp rise in airline fares; and the price of clothing soared 1.2 percent after falling or staying steady for most of the year.
Food and beverages also cost more, with prices rising 0.9 percent last month. Since July 2007, food prices have risen 5.8 percent. More Articles in Business »
U.S. inflation hits highest annual rate since 1991
By Michael M. Grynbaum
Thursday, August 14, 2008
Inflation reached a 17-year high last month, fueled by high gasoline and food prices, all but assuring that the Federal Reserve will keep interest rates on hold for the time being.
Consumer prices were 5.6 percent higher last month than they were in July 2007, a brisker pace than economists had expected, the Labor Department said on Thursday.
That was the sharpest annual increase since January 1991, as Americans paid more for clothing, food, transportation and recreational products. On Wall Street, stock index futures fell sharply after the data was released.
The overall Consumer Price Index, considered the benchmark gauge of domestic inflation, rose 0.8 percent in July. Economists had forecast a rise of half that rate. In June, prices rose 1.1 percent, the second highest monthly pace in 26 years.
The CPI surveys prices of a basket of common consumer goods, measuring everything from toothpaste and prescription drugs to airline fares and restaurant menus.
Because food and energy prices can be highly volatile from month to month, the Labor Department also calculates a so-called "core" price index, which strips out those costs. In July, core CPI rose 0.3 percent, reaching a 2.5 percent annual rate.
That is higher than the Federal Reserve and other economic policy makers would prefer. Central bankers use core CPI to see whether price increases are becoming entrenched in the broader economy; Fed officials are said to prefer a ceiling of 2 percent annual increases.
The Fed has signaled repeatedly that it has no plans to lower interest rates, given the threat inflation poses to the economy. Lowering rates could stimulate more economic activity, but such a move would risk inflating prices further. Thursday's CPI report cements that view, and suggests that a rate increase could come sooner rather than later.
Still, central bankers face a difficult scenario. The American economy continues to deteriorate: consumer spending is bad and likely to get worse; home prices continue to fall; and Wall Street has been unable to shake a credit crisis that keeps hurting big institutions. Stock prices are down too, further eroding household wealth.
The CPI provided further evidence about the price pressures facing Americans this summer. Energy prices were up 4 percent in July; transportation costs increased 1.7 percent on a sharp rise in airline fares; and the price of clothing soared 1.2 percent after falling or staying steady for most of the year.
Food and beverages also cost more, with prices rising 0.9 percent last month. Since July 2007, food prices have risen 5.8 percent. More Articles in Business »