Looks like my forecast is still right on the money — producer prices the highest in 27 years. Once that feeds through to the consumer, the conservative, manipulated CPI will have no choice but to bust through to record highs as well. — Larry
Producer Price Index Jumps 1.2%; Housing Starts Reverse June Rise
Washington (Wall Street Journal) — U.S. producer prices unexpectedly soared at their highest annual rate in 27 years last month as rising wholesale prices for energy spread to a variety of products including automobiles, prescription drugs and capital equipment.
Relief is likely on the way as energy and commodity prices have retreated this month while the U.S. dollar has firmed.
Still, it will be difficult for Federal Reserve officials to look past this latest report, which comes on the heels of a 17-year-high rise in consumer prices.
Unless prices at both the wholesale and consumer level soften quickly in response to the drop in energy prices, Wall Street may have to rethink its view that the Fed will hold official interest rates at their current low levels into 2009.
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