The annual inflation rate climbed to 5.6% in July — the fastest growing rate in 17 years, according to Labor Department figures released Thursday.
Consumer prices jumped 0.8% in July, nearly double the level economists expected. It follows June’s 1.1% increase.
The biggest culprit in inflation’s increase was energy costs, which jumped by 4% on a monthly basis and 29.3% annually. On a somewhat optimistic note, the latest July figures include data collected only from the first three weeks, and do not account for the most recent commodity price decreases, like those seen in oil and gas.
“Energy prices do seem to be coming down a bit. So I’m hopeful that going forward we won’t see as much of an increase,” said UCLA economist Lee Ohanian. “That decline will translate into lower gasoline prices and lower prices across the board.”
However, the core CPI, which excludes volatile food and energy items, still experienced a 0.3% and 2.5% annual increase. Economists expected a 0.2% increase.
Continue reading Inflation fastest in 17 years, rate climbs 5.6%
The Fed and consumers may have less cause for worry over inflation as a continual fall in commodities gives everyone money to purchase more than gas and groceries.
In the last Federal Reserve meeting on August 4, the Fed said "inflation has been high, spurred by the earlier increases in the prices of energy and some other commodities."
While commodity prices have increased, they are nowhere near their punishing spring highs. As an example, oil prices dropped Monday to a low of $112.72 a barrel. A far cry from its record high of $147.27 on July 11.
Continue reading Inflation helped by lower commodity prices
The Federal Reserve met Tuesday and did what most expected… nothing. Concern over both inflation and economic growth were voiced. But in the end, the Fed left the benchmark federal funds rate at 2 %, where it’s been since April.
The vote was 10-1, with a dissent from Dallas Fed President Richard Fisher, who wanted to increase rates to combat inflation, as he did in the last Fed meeting.
Based on the Federal Open Market Committee (FOMC) statement after the meeting, investors took measure and concluded the Fed would not raise rates in the near term either. Continue reading Fed warns against inflation, but hold rates at 2%