Double Whammy
Inflation has shot up in the past year to 4.1% - a very significant jump over the 2006 rate of 2.5%. What's driving it?
Consumer prices rose by 4.1 percent for all of 2007, up sharply from a 2.5 percent increase in 2006, the Labor Department said Wednesday. Consumers felt the pain when they filled up their gas tanks or shopped for groceries. Prices for both energy and food shot up by the largest amount since 1990.
In a second report, the Federal Reserve said that output at the nation's factories, mines and utilities showed no growth in December, adding to a string of weak economic reports showing that the economy was slowing at the end of last year….
….The Consumer Price Index rose by 0.3 percent in December, slower than the 0.8 percent in November, as food costs were flat for the month and energy prices rose by 0.9 percent after an even bigger 5.7 percent jump in November.
Outside of food and energy, inflation rose a more moderate 0.2 percent in December. This measure of core inflation rose by 2.4 percent for all of 2007, down slightly from a 2.6 percent increase in 2006.
Think it's bad now? Wait until the newest diversion of corn into ethanol production begins to bite. This is going to get steadily worse as more and more corn is taken out of the food supply. Food prices are also being socked by vicious fuel prices - but those will likely skyrocket even more as tax increases are put into place. Which is what a Federal commission just recommended - a sharp, 40 cent increase per gallon in taxes.
Wait until this double whammy really begins to hit. Things are going to get unpleasant.
By David Moelling, Wednesday, 16 January , 2008 @ 3:15 pm
Had Pres. Bush’s first energy bill been enacted we would at least have had the first new Alaskan oil entering the market now. Even if world prices were at current levels, that would be coming to the US rather than somewhere else!
By NortonPete, Wednesday, 16 January , 2008 @ 3:46 pm
I got hit buying birdseed which has skyrocketed because the land used for growing sunflowers is now used for ethanol corn.
We need an immediate stimulus. How about coupons for birdseed?
By terrence, Wednesday, 16 January , 2008 @ 3:57 pm
The USA really blew it back in the 1970’s, even with all those line-ups at gas stations. We are paying that piper now. Had energy sources and supplies been addressed back then, we would not have today’s problems.
Unfortunately, the eco-fascists are still directing energy explorations and production (e.g., no nuclear, no drilling in Anwar or off-shore, etc).
Oh well, people get the governments they elect, and deserve.
By ted goldman, Wednesday, 16 January , 2008 @ 6:29 pm
Inflation is worse than 4.1%.
The CPI excludes “food and fuel” , stating that these items are “volitile”.
When do you recall the claimed “volitilty” of food and fuel going down?
Not for many, many years.
Inflation is probably double the 4.1%.
By Maggie, Wednesday, 16 January , 2008 @ 7:58 pm
NortonPete -
So, what you’re saying is … Ethanol is threatening the birds.
What to save … The birds or the (thriving-near-other-drilling-sites) caribou?
Use, basically, a food crop for mechanical fuel production … raise the cost of food and cause shortages.
Or, drill a whole in the ground, pump out a substance millions of years of nature has created and make the people who pump it out of the sand in the desert worried that we might not need THEM so much … and their prices might/could come down.
By feeblemind, Thursday, 17 January , 2008 @ 1:10 am
Terrence nails it. As for it getting worse? Yup. Agreed. What to do? Repubs have their fingerprints all over ethanol. It was Bush that jacked up the production targets. So we could punish the repubs and vote them out…. but wait…. the courts, it’s all about the courts. Next to the courts, the ethanol boondoggle and high food prices shrink to insignificance. This the price we pay when our political parties are the Socialists, and the Me Too, Socialists.
By kidrob13, Thursday, 17 January , 2008 @ 11:59 am
40 cent raise on the gas tax should help right?
By sam, Thursday, 17 January , 2008 @ 12:47 pm
I’m hoping that the GM ethanol thing will work out.