Gas, food costs push inflation up
Published: Thursday, January 17, 2008 at 6:01 a.m.
Last Modified: Wednesday, January 16, 2008 at 9:15 p.m.
WASHINGTON - Consumer prices rose in 2007 at the fastest pace in 17 years as motorists paid a lot more for gasoline and grocery shoppers paid higher food bills. However, falling prices for clothing and new cars offset some of those gains.
The Labor Department reported that consumer prices rose by 4.1 percent for all of 2007, up sharply from a 2.5 percent increase in 2006. Both energy and food prices jumped by the largest amount since 1990.
Workers' wages failed to keep up with the higher inflation. Average weekly earnings, after adjusting for inflation, dropped by 0.9 percent in 2007, the fourth decline in the past five years. The lagging wage gains are cited as a chief reason many workers have growing anxiety about their economic futures.
Providing further evidence of a slowing economy, the Fed reported that output at the nation's factories was flat in December, the worst showing since an outright decline of 0.5 percent in October.
In a separate report, the Fed said its latest survey of economic conditions around the country showed the economy was losing momentum heading into 2008 although seven of the 12 Fed regions did report slight increases in activity.
The mounting signs of economic weakness have greatly raised concerns that the economy could be slipping into a recession. Unemployment jumped from 4.7 percent in November to 5 percent in December, the biggest one-month increase since the aftermath of the 2001 terrorist attacks.
For December, the Consumer Price Index rose by 0.3 percent, slower than the 0.8 percent jump in Novembe
The rising risk of a recession has prompted politicians to consider stimulus packages to give the economy a jump-start to either prevent a recession or at least mitigate its fallout.
President Bush has said he may unveil a plan around his Jan. 28 State of the Union address.
Overall energy costs rose by 17.4 percent this past year while food costs rose by 4.9 percent. Both were the biggest increases since 1990. Gasoline prices were up 29.6 percent, the biggest increase since they soared by 30.1 percent in 1999.
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