Wednesday, August 17, 2005
Well, all those halcyon years of a nearly level inflation rate (anything below 5% is friggen spectacular) are coming to a close. China has been sucking up oil to bolster their reserves for some time now. Speculators, not noticing that this is ending are pushing oil futures higher and higher. This ever increasing price per barrel of crude is starting to show in the economy.
- The wholesale price report showed that energy prices rose by 4.4 percent in July following a 2 percent increase in June.
Gasoline prices were up 10.9 percent, the biggest surge since a 12.8 percent rise last October. Analysts caution that motorists should be braced for another large increase in gasoline costs in August, reflecting the fact that gasoline prices have continued to rise in recent weeks as oil prices have surged above $66 per barrel.
The government reported Monday that the average nationwide price for gasoline rose to $2.55 per gallon in its latest survey, up 18 cents per gallon in just one week.
- The PPI report showed that food costs at the wholesale level fell for a fourth consecutive month, dropping by 0.3 percent in July as the costs of fresh vegetables, fruits and beef all declined.
Over the past 12 months, wholesale prices have risen by 4.6 percent while the core inflation rate, excluding food and energy, has risen by a more modest 2.8 percent.
Computers were one area where prices continued to decline, falling 2.1 percent in July.