Wholesale Inflation Surges in July on Energy Costs

Washington, DC, Aug. 19, 2008--Wholesale inflation in July rose at the fastest pace in 27 years, according to the Labor Department.

The government said that wholesale prices spiked 1.2 percent in July, pushed higher by rising costs for energy, motor vehicles and other products. The increase was more than twice the 0.5 percent gain that economists expected.

Core prices, which exclude food and energy, rose 0.7 percent. That increase was the biggest since November 2006 and more than triple the 0.2 percent rise in core prices that had been expected.

The bad news on wholesale prices followed a report last week that consumer prices shot up by 0.8 percent in July, leaving consumer inflation rising at the fastest pace in 27 years.

The July price pressures reflected in part the big surge in energy costs during the month that pushed crude oil prices to a record of $147.27 per barrel and sent gasoline pump prices to an all-time high of $4.11 per gallon.

Crude oil prices have fallen by more than $30 per barrel since then, raising hopes that the surge in inflation will soon abate.