U.S. Consumer Prices Jumped in June by the Most in 26 Years

[swag]

Source: Bloomberg

By Shobhana Chandra

July 16 (Bloomberg) -- Prices paid by U.S. consumers jumped in June by the most since 1982 on spiraling costs for fuel and food, giving the Federal Reserve even more reason to be concerned about inflation.

The cost of living soared 1.1 percent, more than forecast, after a 0.6 percent gain the prior month, the Labor Department said today in Washington. Excluding food and energy, so-called core prices climbed 0.3 percent, also more than anticipated.

The figures underscore why Fed Chairman Ben S. Bernanke yesterday said inflation risks had ``intensified.'' The surge in energy costs has also trimmed consumer and business spending, hurting growth and making it less likely policy makers will boost interest rates to stem even bigger price increases.

``Inflation has galloped,'' Michael Feroli, an economist at JPMorgan Chase & Co. in New York, said before the report. ``It puts the Fed in a really tricky position. I don't see how they can change rates this year.''



Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=aES0sTkZ0u_A&refer=home

[whistle]

1. Isn't 1.1% from one month to the next the simple annualized equivalent of 13.2%

...and the compounded equivalent of 15.2%

[raccoon]

2. Is it? I don't know how to figure the annualized equivalent, but I'd like to know.

If your figures are correct, no way the MSM will report it.

[whistle]

5. Simple annualized is current month inflation change (increase) times twelve

....simple annualized inflation: 1.1% X 12 = 13.2%

The compound annualized is based on the assumption the the month rate of change remains constant like monthly interest on a savings account:

1.011 X 1.011 X etc (12 times) = 14.03%

(Note: my original post comparison was incorrect, I must have hit the calculator key one extra time)

Anyway, you can see that the larger the monthly rate of change the higher will be the annualized inflation rate. It is clear to see that annualized inflation is now well into the double digit range which is very bad because wages will almost certainly not keep pace, so prices are outstripping the consumer's ability to earn enough to stay even.

[Ghost Dog]

6. Compound rate (use a calculator) is higher. n/t

[Bonhomme Richard]

3. Can anyone say PERFECT STORM? n/t

[On the Road]

4. I Lived Through Double-Digit Inflation in the 70s

and up to now, we haven't really gotten there. *Now* we're starting to get into that territory.

[whistle]

7. It was called stagflation, an economic condition of both continuing inflation and stagnant business

...well make far less in this country now that in the 1970s so when this hits it will hit us very hard

[On the Road]

9. Unemployment is Still Not as Bad as in the 70s

but negative real growth and rising prices are now there. Whether it becomes much worse we won't know until it happens.

[whistle]

10. I suppose not, what was it back then 8.5%-8.8% as I recall, but then

...the unemployment figures were counted differently and certain groups suggest the real unemployment rate in the U.S. today could be closer to 9.9% or as high as 14.0%

http://www.bls.gov/news.release/empsit.t12.htm

[On the Road]

11. I am Admittedly Going from Personal Experience

but I frequently looked for jobs in the 70s and it was very, very tough.

Today, I have a number of tenants who are in the same category. The jobs may not pay as well, but they're there.

[still_one]

8. Actually, it is since 2005, not 25 years /nt

[depakid]

12. No surprise given that petrol prices can't realistically be excluded

from core inflation- eventually, it impacts most every good and service in the states.