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June 17th, 2008 (Modified on July 1st, 2008)

Food and Energy Rising



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.

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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