RR Phantom
Location : Wasted Space Job/hobbies : Cayman Islands Actuary
| Subject: US inflation soars to 17-year high Fri Aug 15, 2008 7:15 pm | |
| AMERICANS paid more not only for petrol and food, but also for goods and services, including clothes, shoes, hotels and air travel, as inflation unexpectedly jumped to a 17-year high.
The consumer price index climbed 0.8 per cent last month, or 5.6 per cent over the past year, the Labour Department said on Thursday, twice as much as Wall Street anticipated. It was the third straight month of high inflation, and, year-on-year, the highest since January 1991, when the economy was in recession.
The data showed that companies, which have been struggling all year with the rising price of oil and other raw materials they need to manufacture and transport their goods, are increasingly passing the higher costs on to consumers.
"There appears to be a shift in the willingness of firms to raise prices," said Dean Maki, the chief economist with Barclays Capital. "Costs are rising so rapidly that many businesses have no choice but to pass along price increases."
Jam maker JM Smucker has raised prices on jams and other cooking supplies. Procter & Gamble has increased the cost of detergent, pet food and razors.
But the inflation report did not spook the market. The Dow Jones Industrial Average rose 82.97 points on Thursday, closing at 11,615.93. Other markets were also up.
Economists said the data was unlikely to change attitudes at the Federal Reserve, which has expected oil and food inflation to spill over into other goods.
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