Food and gas drive big jump in consumer prices
By MARTIN CRUTSINGER - Associated Press
Sunday, June 17, 2007 12:16 AM PDT
WASHINGTON — Consumer prices surged in May at the fastest pace in 20 months, fueled by another big rise for gasoline and an increase for food as well.
Inflation was docile in other areas, with prices for computers, clothes, cars and airline tickets all falling.
The Consumer Price Index posted an increase of 0.7 percent, the biggest one-month gain since the fall of 2005 when energy prices surged after Hurricane Katrina shut down Gulf Coast oil production. Excluding energy and food, the increase for so-called core inflation was just 0.1 percent.
Wall Street chose to focus on the lower-than-expected core reading, believing the Federal Reserve will be happy such underlying inflation pressures are beginning to ease and will leave interest rates alone at their meetings for the rest of the year.
The Dow Jones industrial average rose 85.76 points to close at 13,639.48, capping a 344-point surge over the past three trading sessions, the best three-day point gain since November 2004.
While investors were happy, the big increases in energy and food still meant consumers were falling behind in the cost-of-living struggle. The government said in a separate report that weekly earnings for non-supervisory workers, after adjusting for inflation, fell by 0.2 percent last month. That was the fourth decline in the past five months, reflecting the bite inflation is taking out of paychecks.
‘‘While financial markets love the fact that underlying inflation is tame, if you are an average American and see your food costs rising rapidly and gasoline above $3 per gallon, then inflation doesn’t seem so low,’’ said Mark Zandi, chief economist at Moody’s Economy.com.
The government reported that industrial output was flat in May after a strong 0.4 percent gain in April.
Shae wrote on Apr 21, 2009 11:57 AM: