Energy, Food Spur Inflation to 17-Year High

Washington, DC, January 16, 2008—Inflation rose by the highest amount in 17 years, the Labor Department said Wednesday.

Driving the increase were higher costs for energy and food. Other areas of the economy weren’t as affected, rising .2 percent in December.

Consumer prices increased by 4.1 percent for all of 2007, jumping from a 2.5 percent increase in 2006. Energy prices rose by the largest amount since 1990. However, excluding food and energy they rose 2.4 percent, the smallest amount since 2005.

The Consumer Price Index increased 0.3 percent in December, down from the 0.8 percent increase in November. Food costs were flat for the month, while energy prices rose by 0.9 percent after a 5.7 percent jump in November.

Observers expect the Fed to cut a key rate by half a percent when it meets at the end of the month.

The 4.1 percent increase in overall prices was the largest since a 6.1 percent jump in 1990.

Energy costs rose by 17.4 percent in 2007and food costs rose by 4.9 percent.