Tuesday, July 15, 2008

PPI Rockets

Over the past 12 months, the producer price index, which tracks inflation at the wholesale level, gained 9.2% -- the largest year-over-year gain since June 1981.

The index for gasoline rose 9% in June.

Prices for fresh and dry vegetables gained 14.7%, while prices for eggs for fresh use rose 11.6%.

Prices for pet food rose a record 6% on the month. The prior record was a gain of 3.5% in July 1988.

Prices of crude goods rose 3.7% in June, as prices of energy materials rose 5.4%. Prices for crude foodstuffs and feedstuffs rose 3.5%.

For all practical purposes, inflation in the United States is now at 10%. The Fed has recently slowed money supply growth, if the slowdown continues (unlikely) it will eventually put a damper on inflation. If the Fed starts the money engines again (likely) 20% inflation down the road is very likely.

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