Wholesale inflation at 27-year high
New Haven Register
August 20, 2008

(New Haven Register (New Haven, CT) (KRT) Via Acquire Media NewsEdge) Aug. 20--Wholesale inflation surged to a 27-year high in July, according to a report released Tuesday by the U.S. Department of Labor.

The department's Bureau of Labor Statistics released its Producer Price Index, showing that prices for finished goods jumped 1.2 percent last month, an increase of 9.8 percent from July 2007 -- marking the fastest pace since the 10.4 percent year-over-year gain recorded in June 1981.

The PPI previously had advanced by 1.8 percent in June and 1.4 percent in May.

The PPI is a family of indexes that measure the average change over time in the prices domestic producers pay in the course of delivering goods and services. PPI measures price change from the perspective of the seller. In contrast, the Consumer Price Index measures price change from the buyer's perspective.

Donald Klepper-Smith, chief economist at DataCore Partners LLC in New Haven, said the report reveals "in very loud terms" that higher prices faced by producers will be passed on to consumers by the end of the year.

"This is a recipe for higher consumer inflation at a time when oil prices have abated," he said.

The bureau reported last week that consumer prices were up by 0.8 percent in July, marking the fastest rise in consumer inflation in 27 years.

In Tuesday's report, among prices for finished goods in July, the index for foods went up 0.3 percent, while energy shot up by 3.1 percent.

Higher prices for beef and veal, milk products, soft drinks, bakery products and boxed meat outweighed lower prices for fresh vegetables, eggs, fresh fruits and melons, most natural cheeses, and frozen juices and ades, according to the bureau.

In terms of the finished energy goods index, prices for diesel fuel increased by less than they had in June. But the index for residential electric power climbed 2 percent, while prices also rose for residential natural gas, asphalt, liquefied petroleum gas and lubricating and similar oils.

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