« More Troubles on Wall Street | Main | Medtronic Earns 72 Cents a Share »

Ah, it seems like old times. Not only is the Cold War coming back, but today’s report on producer prices indicates that wholesale inflation is at its highest level in 27 years.

The PPI jumped 1.2% last month which is more than double what economists were expecting. Even if you strip out food and energy and just look at the “core rate” wholesale inflation still rose by 0.7% or more than three times the 0.2% expected by economists.

For July, wholesale energy prices jumped by 3.1 percent following a 6 percent gain in June. That increase reflected big jumps in the price of natural gas, home heating oil and liquefied petroleum gas, which offset a 0.2 percent dip in gasoline costs.

Food prices rose by 0.3 percent in July after a 1.5 percent surge in June. Beef prices jumped by 7.4 percent, the biggest increase in nearly four years. Milk prices shot up by 5 percent, the biggest gain in a year, while soft drink prices rose by 2.4 percent, the largest increase in four years.

Excluding energy and food, the 0.7 percent rise in core inflation reflected big gains in the prices of passenger cars and light trucks, pharmaceutical preparations and plastic products.

Naturally there’s a bit of a lag to these numbers and the dramatic sell-off in oil prices will most likely be seen in next month’s report.

Posted by edelfenbein at August 19, 2008 9:29 AM