Rising Gas, Food Cause 5% Spike in Consumer Prices
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Consumer prices surged 5% in the past year, the biggest jump since 1991, just as households struggled with falling home values and the credit crunch.
Spiraling expenses for food and fuel spurred the increase in June, the Labor Department said yesterday in Washington. The cost of living rose 1.1% from May, more than forecast and the second-largest rise since 1982. Separate figures showed industrial production rose more than estimated because of the end of a strike at American Axle & Manufacturing Holdings Inc. and increased electricity output.
Price gains accelerated last month even after stripping out energy and food, underscoring the challenge for the chairman of the Federal Reserve, Ben Bernanke, as he attempts to steer the economy through the slowdown and credit crisis. Treasuries fell.
“This is a problem for the economy; it’s even worse for the Fed,” the president of Naroff Economic Advisors Inc., Joel Naroff, said. “Inflation numbers are high enough that under different circumstances the Fed would be hiking rates.”