Producer Price Index for July 2008 9.8%

Though the price of crude oil started falling after a July 11 high of $147.27 (from Wikipedia ) (though my personal experience the gasoline prices in Southern California started falling at least a week before the top of the crude prices.) the US Labor Department, who puts out the numbers, blames the increases in fuel costs, though the July inflation numbers surprised a group of analysts who were highly informed on the subject according to a CNN Money report "Wholesale prices: Highest annual rate in 27 years ".  The Labor Department says there was a delayed effect on the PPI from the top of the oil market and promises the rate will be lower next month.  I guess this month's numbers were just a little undercooked.

Yet, as bad as the rise in prices over the last year was, if you take June's monthly rise of 1.2% and July's rise of 1.8%, add them together and then multiply them by 6 which would indicate where we'd end up if the rate we are actually seeing continues you would get a forward looking rate of 18%. The report seems to promise us that those are number we won't be seeing and they are probably correct if only because the Labor Department tends to create new numbers out of thin air when the real ones don't look too good.

This is the same US Labor Department which two mainstream business writers found to be falsely inflating the numbers of new jobs created each month.  In fact one of the journalists reported that the DOL had claimed the US had added half a million jobs in one quarter in 2006 in their monthly, highly publicized reports that TV news depends on for all their analyses and makes big noise about on the first Friday of every month, and then reduced that total very quietly to 19,000 months later -- yes that was 19,000 for the entire quarter, and the change was only reported in the back pages of as little as one (1) newspaper. 

 Of course, as they do whenever inflation is high because of fuel and food prices, they stripped the effect of those necessities to make their numbers quite pretty.  Because practically no one can afford non necessities they didn't raise much at all.

Excerpt report linked above: 

Core inflation: The so so-called core PPI number, which excludes food and energy prices, rose by 0.7% - more than the 0.2% increase analysts had expected.

The core inflation index is "the more long term rate" because it indicates how much inflation "is seeping into the economy" beyond the volatile energy prices, said Roberts.

But don't they say the price of fuel will never go down very much because the supply is squeezed?  

Still the good news is that it is another federal election season and, therefore, we should see lower gasoline prices until late October or early November. 

tags: ppi  producer price index  inflation  

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