Tuesday, August 19, 2008 - 14:30
AFP News Briefs ListUS wholesale inflation at 27-year high
US wholesale prices spiked by their largest margin in 27 years in the year to July as inflationary pressures continue to buffet the world's largest economy, a government survey showed Tuesday.
The report showed that the Labor Department's producer price index (PPI), a key gauge of inflation at the wholesale level, rose by a hefty 9.8 percent in the year to July.
That marked the biggest surge in annualized headline prices at the factory and farm gate since a 10.4 percent gain was recorded in June 1981.
The reading will likely not be welcomed by the Federal Reserve, which has been waging a campaign against inflationary pressures, but Fed policymakers expect inflationary pressures to ebb in coming months, especially as oil prices have cooled markedly in recent weeks.
On a monthly basis, overall prices rose by a more-than-expected 1.2 percent in July against market forecasts which had predicted a rise of 0.4 percent. Headline PPI had risen 1.8 percent in June.
The core PPI rate, which strips out volatile energy and food costs, increased by a more-than-anticipated 0.7 percent in the month to July or 3.5 perce over the past 12 months. Economists had predicted a lesser core rate increase of 0.2 percent for the month.
The core rate had increased a mild 0.2 percent in the month to June.
Wholesale food costs moderated in July from the prior month to show a gain of 0.3 percent and while energy prices also eased they remained relatively high, posting a gain of 3.1 percent in the month to July.
The Fed left its key interest rate anchored at 2.0 percent earlier this month, in part as it adopted a wait-and-see approach to inflation risks.
Images
People shop for canned food at the San Francisco Food Bank in June 2008 in San Francisco. US wholesale prices have spiked by their largest margin in 27 years in the year to July as inflationary pressures continue to buffet the world's largest economy, a government survey showed.
© 2007 AFP Justin Sullivan
