Wednesday, August 17, 2005
It's only a matter of time: From July producer prices jump on energy costsU.S. producer prices rose twice as fast as expected last month on soaring energy costs, government data showed on Wednesday, while prices excluding food and energy also topped forecasts in a sign of building inflation pressures.
"This should keep investors and policy-makers on alert with a recovering economy and a growth profiling stronger in the third quarter than the second quarter," said Anthony Chan, senior economist at JP Morgan Asset Management.
"We are seeing some pricing pressure on the wholesale level, but the (consumer price index) report yesterday showed that it hasn't really passed on to the consumer level," he added. Just wait.
posted by Quiddity at 8/17/2005 08:47:00 AM
1 comments
Which leads me to an economics question I've been asking since last year.
Greenspan is using the conventional inflation-fighting tool of raising interest rates. It worked like a charm when one of the big drivers of inflation was wage growth. But with wages flat or falling and inflation being driven by energy prices, what possible impact could higher interest rates have? Will raising unemployment to 12% or 15% somehow magically make oil prices drop?
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