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Inflation Accelerates in July

Published 08/15/08 Craig Harrington - Print Article
E-mail - editor@economyincisis.org

U.S. inflation jumped 5.6 percent in July from the same time last year, the largest monthly increase in nearly two decades, according to the Wall Street Journal. Prices across the board were higher during the month of July, squeezing American wallets more tightly in the wake of a general economic slowdown.

However, while Americans find themselves stuck in an economic rut, the slowdown which has gripped this economy seems to be spreading globally. As the world prepares for a global recession, the monetary and economic trends which have plagued the United States seem to be reversing slightly.

The dollar has strengthened significantly against foreign currencies and the price of oil has tumbled dramatically despite the serious threat posed by Russia’s war in Georgia. A strong dollar and slightly cheaper transportation could slow inflation in the months ahead, offering much needed relief to Americans already pushed to the edge.

However, the United States’ economy is still far from seeing the light at the end of this tunnel. We would still be dealing with inflation and currency devaluation; it would just be devaluing slower than before. Furthermore, seeing the price of oil futures fall precipitously to near $113 per barrel is small consolation for American consumers whose budgets were pushed to the limit months ago when prices first crossed the $100 threshold.

Yes, inflation has slowed, but it hasn’t stopped and it shows no signs whatsoever of reversing any time in the future. So while this seemingly good news is a public relations dream for this administration – and in fact, for this government as a whole – it hardly makes up for the myriad of difficulties suffered by the American economy.

Source Wall Street Journal:

U.S. inflation accelerated in July, as prices rose 5.6% from a year earlier, the fastest pace in 17 years.

The consumer-price index rose 0.8% from June, reflecting increased prices for food, energy, airline fares and apparel, the Labor Department said Thursday. That followed a rise of 1.1% the month before. Core inflation, which excludes food and energy, advanced 0.3% for the second consecutive month and was up 2.5% from a year before. That is well above the Fed's "comfort zone" of 1.5% to 2%.

…

Thursday's report showed that energy prices swelled 4% last month, while gasoline prices increased 4.1%, and natural-gas prices rose 7.4%. Food and beverage prices rose 0.9%. Medical-care prices, meanwhile, increased 0.1%.

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