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Stooges Testify, Inflation Soars

Written By Brian Hicks

Posted July 16, 2008




Lost in the charade of yesterday’s testimony by Bernanke, Paulson & Cox was an absolutely abysmal wholesale inflation number from the Labor Department. While the Three Stooges entertained, prices continued thier journey to the moon.

According to the most recent data, the producer price index—a leading indicator of where consumer prices will go—soared 1.8% in June. That was significantly higher than expectations.  

Moreover, the Labor Department said producer prices over the last 12 months were up 9.2 percent, the biggest increase since a 10.4 percent gain in June 1981.

That only added to Chairman Bernanke’s ultimate dilemma as inflation expectations continued to take flight, giving him another poke in the eye. 

Of course, where it will all stop now is anybody’s guess. But that is the price the rest of us have to pay for Wall Street greed and operations that are “too big to fail”.  So much for the free markets.

The consumer price index numbers released this morning only offered up more of the same.

Here’s the skinny on those figures, as the cost of practically everything consumers spend money on jumped at the second highest rate in 26 years.

From Reuters entitled: Instant View: CPI up 5.0% in year

“Consumer prices in June rose by the biggest amount since 2005 on a continued surge in gasoline prices. 

 The Consumer Price Index advanced 1.1 percent during the month, the biggest monthly rise since September 2005, the Labor Department said. That was well above the 0.7 percent increase economists polled ahead of the report were expecting.

Prices were up 5 percent from a year ago, the biggest year-on-year rise since 1991.

Excluding food and energy prices, the so-called core CPI rose by a more tame 0.3 percent, but that rise was still higher than the 0.2 percent gain expected. Energy prices advanced 6.6 percent during the month, reflecting a 10.1 percent surge in gasoline prices as consumers are paying well in excess of $4.00 a gallon.”

Richard Fisher is going to have a lot to say at the next FOMC meeting. It is time to end this clown show.