Producer Price Index up 4.1% for 2007
Even without food and energy, index jumped 2.4%
By Tom Stundza -- Purchasing, 1/16/2008 12:40:00 PM
Largely because of soaring energy costs, inflation rose 0.3% in December, and for all of 2007 the consumer price index shot up at the fastest rate in seventeen years, the Labor Department reports today. The core CPI, which excludes volatile food and energy prices, advanced 0.2%. Consumer prices overall in 2007 soared at their fastest rate in almost two decades, increasing 4.1% from the 2006 index. The core CPI was 2.4% higher for 2007, suggesting some spillover from food and energy.
Federal Reserve Board Chairman Ben Bernanke warned last week that higher oil prices are “probably putting some upward pressure on core inflation measures.” Still, a Wall Street Journal online report suggests that the inflation data isn't alarming enough to prevent the Fed from carrying out a fourth straight interest-rate reduction later this month because of signs that the housing slump has spread to the broader economy.
Since weak economic growth is a bigger concern to Bernanke than higher inflation, he has pledged to make “substantive rate reductions” if needed to support the economy. Economists and Wall Street have taken that comment as code for a half-point rate cut at the Fed's Jan. 29-30 meeting.
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