Inflation Accelerates in June

Thanks to the Federal Reserve, the inflation rate has jumped up to 1.056% during the month of June. That is a 13.4% annualized rate:

WASHINGTON -- U.S. consumer prices soared at their fastest annual pace in nearly two decades last month, tightening the screws on Federal Reserve officials as they balance a stagflationary mix of rising unemployment, strained financial markets and rising inflation.

Even more worrisome for policymakers than the headline inflation jump may be signs that food and energy prices are starting to filter through the broader economy, as evidenced by sharp price gains last month in housing, transportation and services.
Separately, a heat wave and the end of an auto sector strike gave a lift to U.S. industrial production in June, rising well above expectations.

The consumer price index jumped 1.1% in June, the Labor Department said Wednesday, the second-highest increase since 1982 and the highest since 2005. Excluding food and energy, it advanced 0.3%. Wall Street economists had expected a 0.7% rise in the headline and 0.2% core increase, according to a Dow Jones Newswires survey.

Unrounded, the CPI rose 1.056% last month. The core CPI advanced 0.323% unrounded.

The blame for this may be properly laid at the feet of Ben Bernanke. There was no need for him to drive the Fed Funds target down to 2%. The problems in the financial industry were not due to high interest rates.