Wholesale inflation takes biggest jump in 6 months

[DKW 86 8,246]

http://finance.yahoo.com/news/Wholesale-in...f-14410311.html

Wholesale inflation takes biggest jump in 6 months

Wholesale inflation jumps by largest amount in 6 months, reflecting higher energy costs

Martin Crutsinger, AP Economics Writer

Thursday February 19, 2009, 8:53 am EST

Yahoo! Buzz Print WASHINGTON (AP) -- Inflation at the wholesale level surged unexpectedly in January, reflecting sharply higher prices for gasoline and other energy products.

The Labor Department said Thursday that wholesale prices increased by 0.8 percent last month, the biggest gain since last July and well above the 0.2 percent increase that economists had expected.

The acceleration was led by a 3.7 percent surge in energy prices with gasoline prices jumping by 15 percent, the biggest gain in 14 months.

Even outside the volatile food and energy sectors, wholesale prices showed a bigger-than-expected increase, rising by 0.4 percent. Economists had expected a slight 0.1 percent rise in so-called core inflation.

Food prices were well-behaved last month, falling for a second straight month. The 0.4 percent decline in January reflected lower costs for beef and dairy products which offset gains in the price of vegetables and chicken products.

In addition to the big jump in gasoline costs, prices for home heating oil were up by 5.4 percent and liquefied petroleum gas, which is often used to heat homes in rural areas, surged by 20.2 percent, the biggest jump in more than six years.

Outside of food and energy, there were increases for pharmaceuticals, light trucks and passenger cars and civilian aircraft.

Despite the big jump in wholesale prices in January, economists do not believe inflation is on the verge of becoming a problem, given the country's deep recession.

That downturn, which began in December 2007, has been keeping a lid on inflation pressures, which has given the Federal Reserve the room to slash a key interest rate to nearly zero without having to worry about kindling inflation.

Federal Reserve Chairman Ben Bernanke told an audience at the National Press Club on Wednesday that he saw little risk that the Fed's efforts to fight the recession and a severe financial crisis would trigger inflation presusres.

He said that once the economy begins to rebound and financial markets stabilize, the Fed will be able to quickly reverse the actions it has taken before inflation becomes a problem.

[arnaldoabru 11]

Funny how the biggest jumps were in gasoline and heating fuel. Those dern hurricanes

[CCTAU 3,883]

Funny how the biggest jumps were in gasoline and heating fuel. Those dern hurricanes

That damned Bush. I bet he forgot to turn over that weathering machine he has to the ONE.

[au2004ece 30]

I think we are in deflationary period at the moment. But within a year, we will go into inflation and then into monster inflation (if the economy picks up). All the debt that the US government is creating will have to be paid somehow. The federal reserve will be busy printing money like crazy. So, when we hit this huge inflation in the next 2-5 years, you can thank this "stimulus package".

[autigeremt 7,553]

And we will be in worse shape than at any point since the 30's. All because of Socialism.