Tuesday, February 26, 2008

Wholesale Inflation Rises at Highest Rate in 26 Years

And I can almost guarantee it's only the beginning:

WASHINGTON (AP) -- Inflation at the wholesale level soared in January, pushed higher by rising costs for food, energy and medicine.

The Labor Department said Tuesday that wholesale prices rose 1 percent last month, more than double the 0.4 percent increase that economists had been expecting.

The January surge left wholesale prices rising by 7.5 percent over the past 12 months, the fastest pace in more than 26 years, since prices had risen at a 7.5 percent pace in the 12 months ending in October 1981.

And the Fed's rate cuts still haven't kicked in. Is it safe now to say I told you so? Maybe not, the real indication will come sometime by late summer, when liquidity will have had it's chance to move around the market, hopefully spawning some kind of economic growth before stagflation (as I predict) will begin in full force. I'm no economist, so only time will tell I suppose.

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