Interest Rate Roundup

Wednesday, July 16, 2008

CPI shows we are an inflation nation


The June Consumer Price Index just hit the tape. Both the headline and "core" numbers were worse than expected. Have a look ...

* The overall CPI shot up by 1.1% in June. That compares with a forecast for an increase of 0.7%. It's the largest one-month rise since September 2005, when hurricane-related damage to oil production and refining facilities drove energy prices higher. Excluding that month, you have to go all the way back to June of 1982 to find a one-month change equaling this one (and all the way back to March 1980 to find a larger increase).

That pushed the year-over-year inflation rate to a whopping 5%. That's up from 4.2% a month earlier and the highest going back to May 1991 (a tie).

* The "core" CPI - which eliminates those products none of us use, like gas and food -- rose 0.3%, faster than the 0.2% gain that analysts were expecting. Core CPI is now rising at a 2.4% rate, up from 2.3% a month earlier but roughly within the range of the past few months.

* Inflation was widespread, with housing inflation up 0.5% on the month, food and beverage prices up 0.7%, education and communication prices up 0.5%, and inflation in other goods and services up 0.4%.

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