Credit, Economy and Financial News from TruckingFactor.com

Inflation Creeps up as Energy Prices Rise

Reflecting higher energy prices, wholesale inflation crept up to its highest level in six months in January. The Labor Department reported that producer prices grew 0.8% in January, the biggest gain since July 2008, as energy prices jumped 3.7%. Gasoline prices soared 15%, the biggest gain in 14 months. In addition, prices for home heating oil were up 5.4% and liquefied petroleum gas, often used to heat homes in rural areas, surged 20.2%. But, even excluding the volatile food and energy sectors, wholesale prices grew a bigger-than-expected increase 0.4%. Food prices, however, fell 0.4% in January, reflecting lower costs for beef and dairy products. Despite the jump in wholesale prices in January, many economists do not believe inflation will be a problem in the near future due to the recession.

Meanwhile, consumer prices grew a modest 0.3% in January, the Labor Department reported, the biggest monthly gain since July 2008. Core inflation, which excludes energy and food, showed a more modest 0.2% increase. The biggest driver in the January increase was a 1.7% jump in energy prices, the first gain after five months of declines. This was led by a 6% jump in prices at the pump. But, despite the January increase, inflation for the 12 months ending in January was zero. In addition, as with producer prices, economists believe the recession will keep prices in check this year. In fact, they are more concerned with the potential for crippling deflation, which can seriously drag down wages and home prices even further. Food prices edged up 0.1% in January and apparel prices grew a surprising 0.3%, given the heavy discounting by retailers to clear winter merchandise.

Return to: Factoring, Credit and Economy News

Date Last Updated: 02/26/2009