Consumer prices are pushing up much higher and faster than anticipated, spurred on by higher energy costs. And with the recent increased tensions with Iran, and all-out civil war in Palestine, oil prices are expected to go even higher. Inflation is really bad news in an election season...
Consumer prices shot up at the fastest pace in 20 months in May, fueled by a surge in gas prices. However, inflation pressures were moderate in most other areas.
The Labor Department reported that its closely watched Consumer Price Index registered a 0.7 percent increase last month, the biggest advance since Hurricane Katrina shut down Gulf Coast oil production in the fall of 2005.
Outside of the volatile energy and food categories, inflation rose by a much more modest 0.1 percent. That was slightly lower than the 0.2 percent which had been expected and provided reassurance that this year's surge in energy costs has not spread to other parts of the economy.
Meanwhile, the Federal Reserve reported that industrial production was flat in May after a 0.4 percent surge in April. The slowdown in May had been expected. While factory output and mining, which includes oil drilling, both posted increases, those gains were offset by a 1.3 percent plunge in output by the nation's utilities. This reflected a return to milder weather after a colder-than-normal April.
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