By Mark Huffman
ConsumerAffairs.com
August 14, 2008
The U.S. economy showed dangerous signs of inflation in July, as the Consumer Price Index, issued monthly by the Commerce Department, rose 0.8 percent. That follows a 1.1 percent rise in June.
As expected, food and energy prices led the increase. Energy prices rose four percent in July following June's 6.6 percent jump. Energy costs are up nearly 30 percent on a year over year basis.
"The battering of consumers continues as prices are rising for just about everything," said Joel Naroff, chief economist for Commerce Bancorp.
Naroff says consumers shouldn't think things will get a whole lot better, just because oil prices are dropping. He says the July price increases were broad based, with food, education, communications and transportation were all up sharply.
"If you smoke, you are paying a lot more as well," he said. "But the real eye opener was the jump in clothing prices. One month is hardly a trend, but with import prices jumping, we may be now seeing apparel adding to inflation rather than restraining it."
On the positive side, health care expenses appear to have come under control, something Naroff calls a "very surprising and hopeful development." He says motor vehicle prices are stable and shelter expenses were contained by the soft housing market. Hotels, however, have been able to push through lots of increases recently.
