Food and Energy Risingby Tim Manni
Escalating food and energy costs have driven up wholesale prices in May to their highest mark in six months. In a report released today by the Labor Department, the Producer Price Index, a measurement of the cost of goods sold to retailers, jumped 1.4%, up from a 0.2% rise in April.
Energy prices rose 4.9% in May, Diesel prices rose 11.2%, gas 9.3%, home heating oil 8%, and food prices jumped 0.8%. As food and energy continue to rise, companies will be forced to increase prices, and pass along their increased costs to consumers.
Removing the unpredictable monthly costs of food and energy, “core inflation” rose just 0.2%, an improvement from April’s 0.4% gain.
Market observers are almost positive that the Fed will leave interest rates unchanged at next week’s two-day meeting. Fed officials believe inflation is still under control, and increasing interest rates too quickly will disrupt and damage the already fragile housing market.