Inflation Up-What A Surprise

By Andrew Paparozzi
In June 13, 2008

Data released by the Bureau of Labor Statistics (BLS) show that consumer prices rose by 0.6% in May—their fastest increase since November. We all know the culprits; food and energy. The latter showed a one-month jump of 4.4%, with gasoline spiking 5.7%. Just in time for the summer driving season. Food wasn’t nearly as bad rising 0.3% in May, but it is up 5.1% for the year. On a similar basis, gasoline was up 20.8%, while the overall CPI was up 4.2%.

The so-called core CPI, which excludes food and energy, was much more tame—up 0.2 % in May and 2.3 % for the year. While the “core” concept is useful for determining embedded inflationary pressures and has policy ramifications, food and energy costs are soaking up household purchasing power. And there doesn’t seem to be much relief in sight. The only areas where consumers seem to be catching a break are apparel and autos.

You wouldn’t think that consumer purchasing power is being crimped at all based on the May retail sales figures released by the Census Bureau. Advance data show May sales at $385.4 billion, an increase of 1.0% from the previous month—a larger increase than expected. Even when we exclude gasoline stations and grocery stores, retail sales were up 0.9%. It looks like consumers are spending their rebate checks in advance and doing their best to keep the economy from sliding into recession. But will it be enough?

Joseph Vincenzino

Andrew Paparozzi

Epicomm's Andrew Paparozzi, Vice President/Chief Economist, is well-known for his accurate and thoughtful discussions on the economy and US commercial printing industry. A foremost author and speaker on economic business trends in the printing industry, Paparozzi heads Epicomm's Printing Economic Research Center.

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