This morning the Labor Department announced that producer prices increased by 1% in Janurary, and is up 7.4% from last Janurary. This YoY increasre is the largest in 26 years. The prices were higher due to energy costs and by the biggest increase in food costs in three years.
That report stirred fears among some economists that the economy could be returning to the stagflation of the late 1970s. Stagflation is shorthand for sluggish growth coinciding with high prices.
The data will provide ammunition to Fed hawks, some of whom have argued recently that the central bank has already cut interest rates enough over the past six months.
Here is a list of price increases:
- Energy prices rebounded 1.5% in January after having fallen 3% in December and having jumped 11.4% in November.
- Gasoline prices rose 2.9% last month, while wholesale prices for home heating oil climbed 8.5%.
- Food prices surged 1.7% in January, marking the fastest pace since October 2004.
- January's prices for car and light truck both rose 0.3%, with wholesale prices for drug preparations having increased 1.5%.
- Book publishing costs rose 1.7% in February, which is the fastest pace since March 2002.
See my earlier post on Stagflation.
Source:
http://news.yahoo.com/s/nm/20080226/bs_nm/usa_economy_prices_dc_1
http://www.marketwatch.com/news/story/us-jan-ppi-jumps-energy/story.aspx
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