Consumer Prices Surge Most Since ’82

U.S. consumer prices soared in June. The stagflationary mix of rising unemployment,
strained financial markets and rising inflation, painting the Federal Reserve
into a box.

Consumer Price Index surged 1.1% in June, almost twice the rate in May, and far above the consensus expectations of Wall Street economists, who were looking for a 0.7% rise. It was the biggest monthly gain in the inflation indicator since June 1982.  Year over year, the price index has risen 5%, the biggest 12 month jump since May 1991.

Medical care prices, meanwhile, increased a modest 0.2%, while clothing prices rose just 0.1%. These were the only
bright spots, as other components posted sharp
gains:

Transportation prices rose 3.8%
Airline fares
swelled 4.5%
Energy prices jumped 6.6%
Gasoline prices spiked 10.1%
Natural gas prices rose 4.9%.
Food and beverage prices rose 0.7%
Commodity prices soared 1.9%  (a record monthly high).

(Charts below)

The core rate increased 2.4% from June 2007, also
far more than consensus expectations.

Adding insult to injury, the Labor Department noted that "average weekly earnings of U.S. workers,
adjusted for inflation, fell 0.9% in June
." This means that the typical American household income is failing to keep up with rising prices.

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Cpi3

Charts via Jake

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Source:
Consumer Price Index Summary:  JUNE 2008
BLS, July 16, 2008
http://www.bls.gov/news.release/cpi.nr0.htm

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Jim Rogers: Fannie Plan a ‘Disaster’

"I don’t know where these guys get the audacity to take our money, taxpayer money, and buy stock in Fannie Mae,” Rogers, 65, said in an interview from Singapore. “So we’re going to bail out everybody else in the world. And it ruins the Federal Reserve’s balance sheet and it makes the dollar more vulnerable and it increases inflation.”

The chairman of Rogers Holdings, who in April 2006 correctly predicted oil would reach $100 a barrel and gold $1,000 an ounce, also said the commodities bull market has a "long way to go” and advised buying agricultural commodities.

 

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Jim_rogers

The U.S. Treasury Department’s plan to shore up Fannie Mae and Freddie Mac is an "unmitigated disaster” and the largest U.S. mortgage lenders are "basically insolvent,” according to investor Jim Rogers.

Taxpayers will be saddled with debt if Congress approves U.S. Treasury Secretary Henry Paulson’s request for the authority to buy unlimited stakes in and lend to Fannie Mae and Freddie Mac, Rogers said in a Bloomberg Television interview. Rogers is betting that Fannie Mae shares will keep tumbling…

"These companies were going to go bankrupt if they hadn’t stepped in to do something, and they should’ve gone bankrupt with all of the mistakes they’ve made,” Rogers said. “What’s going to happen when you Band-Aid and put some Band-Aids on it for another year or two or three? What’s going to happen three years from now when the situation’s much, much, much worse?” . . .

The U.S. economy is in a recession, possibly the worst since World War II, Rogers said.

"They’re ruining what has been one of the greatest economies in the world,” Rogers said. Bernanke and Paulson "are bailing out their friends on Wall Street but there are 300 million Americans that are going to have to pay for this.”

Source:
Fannie Plan a `Disaster’ to Rogers; Goldman Says Sell
Carol Massar and Eric Martin
Bloomberg, July 14 2008
http://www.bloomberg.com/apps/news?pid=20601087&sid=a7hS5BuYqeR8&

Don’t Bail Out Fannie, Freddie: Jim Rogers   
CNBC.com | 15 Jul 2008 | 05:02 AM ET
http://www.cnbc.com//id/25684069

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