Surging Energy Costs Push Inflation
Up
Yahoo News/AP
By MARTIN CRUTSINGER, AP Economics Writer
February 22, 2006
WASHINGTON - Consumer prices shot up in January at the fastest pace in four
months as the cost of gasoline and electricity posted big gains.
The Labor Department reported that its closely watched Consumer Price Index
rose by 0.7 percent last month, with about 70 percent of that increase coming
from higher energy costs. The core rate of inflation, which excludes energy and
food, was better behaved, rising by 0.2 percent, a moderate increase that was
in line with forecasts.
The Federal Reserve under new Chairman Ben Bernanke is closely watching to
see whether the huge gains in energy prices over the past two years are
starting to spill over into more widespread price troubles that would prompt
the central bank to raise interest rates more aggressively to fight
inflation.
The 0.7 percent overall rise in consumer prices was larger than the 0.5
percent increase that Wall Street had been expecting. It was the biggest price
rise since a 1.2 percent surge in September.
Consumer prices have been on a rollercoaster in recent months depending on
what energy does. Prices actually fell by 0.1 percent in December and 0.7
percent in November, reflecting declines in energy that had followed a huge
increase in September in the wake of hurricane-related Gulf Coast production
shutdowns that had sent the price of gasoline surging to over $3 per
gallon.
For January, energy prices were up 5 percent, the biggest surge since an
11.8 percent rise in September. The January gain reflected a 6.4 percent rise
in gasoline pump prices. Electricity prices soared by 5.5 percent, which was
the largest one-month rise in 54 years of record keeping. That huge gain
reflected efforts by utilities to pass on to consumers their higher fuel
costs.
Food prices were up 0.5 percent, the biggest rise in nine months. More than
half of the food price increase reflected big gains in fresh fruits and
vegetables.
Excluding food and energy, core inflation rose a moderate 0.2 percent after
a 0.1 percent increase in December. Clothing prices were up 0.3 percent in
January, the biggest increase since August.
New car prices were up 0.6 percent, the biggest rise in a year, while
airline fares shot up 1.2 percent, the biggest increase since a 1.5 percent
rise last October.
Medical care, which usually leads the price increases, posted a modest 0.1
percent rise in January as the cost of physician services fell by 0.8 percent,
the biggest decline on record.
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