Consumer prices rise at double the expected rate
August 14, 2008
(AP) – WASHINGTON -- Consumer prices shot up in July at
twice the expected rate, pushed higher by surging energy and food costs. The
latest surge left inflation running at the fastest pace in 17 years.
The Labor Department reported Thursday that consumer prices
rose by 0.8 percent last month, twice the 0.4 percent gain that economists had
It marked the third straight month of oversized inflation increases
following jumps of 0.6 percent in May and 1.1 percent in June. And it leaves
inflation rising by 5.6 percent over the past year, the biggest 12-month gain
since January 1991.
Core inflation, which excludes volatile food and energy
costs, rose 0.3 percent in July, slightly higher than the 0.2 percent increase
that economists had expected. For the past 12 months, core inflation has risen
by 2.5 percent, the highest 12-month change since February.
The big rise in inflation left consumers even more squeezed.
The Labor Department said that average weekly earnings, after adjusting for
inflation, fell by 3.1 percent in July compared to a year ago, the biggest
year-over-year decline since November 1990.
The Labor Department also reported that the number of newly
laid off workers filing for unemployment benefits fell by 10,000 last week to
450,000. The decline was less than expected and showed the labor market remains
under severe stress from the weak economy. The four-week average for claims
rose to the highest level in six years.
Food costs shot up by 0.9 percent in July, reflecting higher
costs for a wide variety of food products. Over the past 12 months, food prices
have risen by 6 percent, reflecting surging commodity prices. The Agriculture
Department reported this week that this year's corn and soybean harvests will
be among the largest in history, though, easing fears that had been fueled
after heavy flooding in the Midwest in June.
The core inflation figure was driven higher by a big 1.2
percent jump in clothing costs, the biggest increase in this area since August
1998. Airline ticket prices, which have been surging because of higher fuel
costs, jumped another 1.3 percent in July.